Nifty forms Bearish Engulfing candle
MACD has given a fresh sell signal, Index also forms lower high candles; As long as it trades above the breakout level 17443, it better be with a positive bias or neutral bias
image for illustrative purpose
NSE Nifty ended the financial year on a flat to negative note. During this financial year 2021-22, the Nifty is up by 17 per cent or 2581 points. It has formed a new lifetime high on 19th October at 18604.45. It has experienced three corrections of over 10 per cent during the year. The Nifty closed at 17464.75, a 33.50 points lower.
The FMCG index is up by 1.2 per cent. Media, Smallcap-100 and Midcap-100, Realty, Bank Nifty, Realty indices closed positively in 0.1 to 0.8 per cent gain. The Pharma index is the top loser with 1.17 per cent. The IT, Metal, Infra and Energy indices decline by 0.1 per cent to 0.7 per cent. Comparatively, it is dull on a monthly expiry. The market breadth is positive as 1141 advances and 899 declines. About 49 stocks hit a new 52-week high, and 129 stocks traded in the upper circuit. Max Health, Adani Power and Tata Elxsi were the top trading counters today.
After breaking out of an 8-day range, the Nifty is failing to move in a faster retracement. The lack of follow-through price action after the breakout is not convincing as it was traded only in very tight intraday ranges. The Nifty has formed a bearish engulfing candle today on an expiry day. The momentum once again is very low. It tested the breakout level during the day but closed above the breakout level.
As mentioned yesterday, the negative divergence in RSI and MACD on a 75-minute chart is more clearly visible now. The Nifty also formed lower high candles, and the last candle is an inside bar. The MACD has given a fresh sell signal. After two consecutive gaps up openings and hammer and hanging man candle, today's bearish engulfing does not give the confidence to go long. Still, the directional bias is neutral. The Nifty closes below the prior day's low of 17435 or opens with a gap down and closes negative, which will give a fresh bearish signal. As long as it trades above the breakout level 17443, it better be with a positive bias or neutral bias.
(The author is Chief Mentor, Indus School of Technical Analysis, Financial Journalist, Technical Analyst, Trainer and Family Fund Manager)
