Nifty charts signal strong bullish set-up
It closed above the previous week's high and formed a bullish engulfing on a weekly chart as of now; Thursday will be a crucial day for indices
image for illustrative purpose
The domestic equities rallied sharply higher, above the previous week's high. The Nifty went up massively by 446.40 points or 2.58 per cent and settled at 17759.30. All the sector indices advanced by 1-3.5 per cent. The Nifty Realty, Bank Nifty, and Fin Nifty are up by over 3.3 per cent. The Nifty IT, Metal, Auto, FMCG, and Midcap-100 indices gained over 2 per cent. All the other sector indices closed with above percentage points. The VIX cooled off by 5.66 per cent. The market breadth is extremely positive as 1429 advances and 440 declines. About 99 stocks hit their new 52-week high, and 102 stocks traded in the upper circuit. Reliance, PEL and Adani Enterprises were the top trading counters on Tuesday in terms of value.
The Nifty has formed one of the strongest bullish candles in recent time. It recovered all the previous day's losses. It retraced over 61.8 per cent of the recent fall. All the Nifty-50 stocks closed positively.
It closed above the previous week's high and formed a bullish engulfing on a weekly chart as of now. All the hourly candles were closed above the previous bar's high.
There was not even a single candle showing weakness or consolidation signs. All the Nifty-50 stocks closed in positive territory. The Nifty was up by over 611 points or 3.56 per cent from the previous day's low. This kind of impulsive straight-line fashioned rally enters into a consolidation sooner or later.
Interestingly, the index is regained above the sloping trend line resistance drawn from October 2021 high. In all time frames, the RSI is in the bullish zone. On an hourly chart, the index is above the moving average ribbon, and the ribbon is in an uptrend. The MACD line is also above the zero line. This is the strong bullish set-up. After 18th August, the Elder Impulse System formed a strong bullish bar. Currently, the index is 1.03 per cent above the 20DMA. Interestingly, there is no improvement in RRG RS and momentum. They are still below the 100 zone. Thursday will be a crucial day for indices. Let us watch the index closely.
(The author is Chief Mentor, Indus School of Technical Analysis, Financial Journalist, Technical Analyst, Trainer and Family Fund Manager)
