Nifty Forms Bullish Engulfing Candle On Weekly Chart

The equities benchmark index continued to rally and registered a 760-point rally from Monday’s low. NSE Nifty ended with 258.90 points or 1.11 per cent gain and closed at 23,508.40 points. All the sectoral and thematic indices ended in green. The CPSE, PSE, and Energy indices gained over 2.63 per cent. The Consumer Durable, Smallcap, and FMCG indices gained over two per cent. The India VIX is down by 6.57 per cent. The market breadth is positive as 2,130 advances and 711 declines. About 58 stocks hit a new 52-week low, and 171 stocks traded in the upper circuit. Kalyan Jewellers, JWL, Jindal Steel, Waree Energy, and BEL were the top trading counters today in terms of value.

It continues to rally before the budget. The Nifty has broken out of a Double-Bottom pattern with above-average volume. The higher volumes validate the breakout. It also closed near to the day’s high. It formed a bullish engulfing candle on a weekly chart with a massive weekly volume. Now, the question is that will the rally continue to reach above the 200DMA? Now, the index is decisively above the 20DMA and just 1.26 per cent below the 50DMA. The 200EMA is at 23622, and the 200DMA is at 23,998. For a trend reversal, the Nifty must close above these resistance levels. The RSI reaches above the 50 zone. Its bullish divergence gets the confirmation for its implications. On an hourly chart, the RSI reached the overbought zone. And the MACD histogram shows a strong bullish momentum. The Bollinger bands contracted further, indicating the probable impulse move on either side. Wait for the Budget speech to end to take the positions, will get the directional bias by 1.30 pm. Stay away taking position before that.

(The author is partner, Wealocity Analytics, Sebi-registered research analyst, chief mentor, Indus School of Technical Analysis, financial journalist, technical analyst and trainer)