Nifty forms higher high & higher low

The domestic market hit a new lifetime high, although the IT sector dragged the market lower. The Nifty touched 18,041.95 points, with a profit booking, it closed at 17945.95 with 50.75 points gain. The Nifty Auto is the top gainer with 2.67 per cent. Bank Nifty, Metal, Realty, Media and Energy sector indices up by over one per cent. The IT index is down by 3.36 per cent due to TCS's 6.35 per cent decline. The India VIX up by 2.76 per cent and settled at 16.08. The overall market breadth is positive as 1,121 advances and 901 declines. About 167 stocks hit new 52 week high and 187 stocks traded in the upper circuit.

The most enthusiastic breakout on Monday was dampened by TCS' over six per cent decline. After meeting our intermediate target of 18040, the Nifty declined by 96 points from the day's high. It formed a Shooting Star candle and closed below the prior pivot level of 18748. The market sentiment was most positive despite the IT sector index declined by 3.36 per cent, and TCS declined by 6.35 per cent. With today's price action, the breakout is now in second thoughts. The RSI faced resistance at a confluence point.

At one point of time, it went above the double valley point and broke out of a downward channel at one point of time. It closed near to the resistance line. As the Nifty formed a higher high and higher low candle, it is a bullish sign. Previous day's lone-legged Doji engulfed on Monday and closed above the Doji high. The bearish momentum further declined. MACD histogram is showing a considerable decline in bearish momentum. Now, the support is moved higher to 17839, and the 20DMA is 17677. Only a close below 17839, will give a weak signal. A sustained move above 17948 is a positive sign for the market. There're bearish signals in Nifty in any time frame.

(The author is financial journalist, technical analyst, family fund manager)