Nifty forms an outside candle
By closing above the previous week’s high, it erased the last week’s weakness; Stay on with cautiously optimistic approach
image for illustrative purpose
On a monthly expiry day, the equities traded with high volatility. After opening with a gap down, it closed above the prior day’s high. NSE Nifty has gained by 167.95 points or 0.75 per cent and closed at 22,570.35 points. The PSU Bank index is the top gainer with 3.70 per cent and led the rally. The Pharma, CPSE, and PSE indices gained by 1.30 per cent each. Auto, Energy, and Metal indices are up by over one per cent. The Consumer durables and Realty indices are down by 0.43 per cent and 0.25 per cent.
All other indices gained by less than a per cent. The India VIX is up by 4.43 per cent to 10.73. The market breadth is positive as 1,446 advanced and 1,149 declined. About 136 stocks hit a new 52-week high, and 127 stocks traded in the upper circuit. Kotak Bank, Idea, Axis Bank, and SBI are the top trading counters on Thursday in terms of value.
After three days of indecisiveness, the Nifty able to close above 22,477 points. It opened with a 85.50 points gap down; it smartly recovered in the second half and traded mostly within the first hour's range. The volumes were higher than the previous day and above --average due to expiry adjustment trades. The Nifty is forming a series of trapping candles. First, it formed Doji and an open-high candle. It also formed a Shooting Star candle. These candles have given bearish and indecisive signals. With the afternoon session’s strong bullish bounce, the Index has formed an outside candle. The Index tested the 78.6 per cent retracement level. The RSI is at 58.31, near the bullish zone. In any case, the RSI closes above 60 on the weekend, which will give stronger bullish signals.
The MACD is also about to give a bullish signal. Thursday’s move of 320 points, after two days of very tight range, shows trend strength. The Index has not closed below the prior day’s low in the last five days. If the Index closes above the 22,520 on a weekly closing basis, it will be a new high close. By closing above the previous week’s high, it erased the last week’s weakness. Watch the 10-week average of 22,326 points, which acted as strong support for the last four months. Only another close below this support will be negative. Stay on with cautiously optimistic.
(The author is Chief Mentor, Indus School of Technical Analysis, Financial Journalist, Technical Analyst, Trainer and Family Fund Manager)
