Nifty forms Evening Star
Stay positive with cautiousness and maintain a stop loss strictly; If the index close above the 22562-22589 zone, it will form a bullish engulfing candle
image for illustrative purpose
After Thursday’s high volatility, the equities traded in a range. The sustained the positive bias and closed at 22,466.10 points with a 62.25 points or 0.28 per cent gain. Only IT and Pharma indices are down by 0.85 per cent and 0.08 per cent, respectively. The Consumer Durable index is the top gainer with 2.78 per cent. The Auto, Realty, Metal, and Smallcap-100 indices are up by over 1.6 per cent. The PSE and CPSE gained over a per cent. All other sector indices are up by less than a per cent. The India VIX is down by 0.99 per cent to 19.80. The market breadth is positive as 1,692 advances and 924 declines. About 132 stocks hit a new 52-week high, and 150 stocks traded in the upper circuit. IRFC, Mazdock Shipbuilder, HAL, and M&M were the top trading counters on Friday, in terms of value.
The Nifty registered a second straight positive day. It tested the mean level of the rising channel. After forming an identical candle of 13th May on Thursday, the index traded with lower volume and reduced daily range. It closed above the 61.8 per cent retracement level, decisively. Now, the question is, on a special trading session on Saturday, will the Nifty be able to close above the 22,562-22,589 zone of resistance or last week’s high? If the index closes above this zone, it will form a bullish Engulfing candle. On Friday, it took support at 20DMA and bounced. It also closed above the prior day’s high. The index lost its momentum in the afternoon session. Friday’s candle structure looks like an evening star. If the index opens negative and closes below the open will be negative for the index. The hourly RSI is just flat throughout the day. The M&M and Reliance were top contributors to the Nifty gain. For an upside momentum to continue, the index must form higher highs and higher lows. In any case, if it closes below the 20DMA of 22,353 points, it will be negative. Stay positive with cautiousness and maintain a stop loss strictly.
(The author is Chief Mentor, Indus School of Technical Analysis, Financial Journalist, Technical Analyst, Trainer and Family Fund Manager)
