Nifty forms lower low, lower high

The domestic market closed higher after a volatile session. The benchmark indices opened in the negative zone and finally closed at the highest level after June 15. The NSE Nifty up by 61.40 points and settled at 15,879.65 points. The Metal and Realty indices rallied the most by 2.20 per cent and 1.96 per cent, respectively. Most of the sectoral indices advanced by half a per cent. The Auto, Media and Energy indices down by quarter a per cent. India VIX further down to 12.2125. The Market breadth is positive as 1,063 advances and 920 declines. About 157 stocks hit the new 52 week high, and 129 stocks traded in the upper circuit.

The markets are repeatedly testing the resistance. For the fifth time, the Nifty tested the 15,895 level. It formed a lower low and a lower high and tested the 20DMA. As we discussed on Tuesday, the 20DMA worked as support now. The Bollinger bands contraction still present, and the 20DMA flat to slightly up. The RSI moved out of the downward channel. The MACD histogram shows a decline in the bearish momentum. The supports and resistances beyond six times are very rare in any time frame.

As the Nifty has not closed below the prior day low, the positive strength is intact. As mentioned yesterday, unless it closes below the 20DMA (15,771) avoid taking short positions. On a 75 minute chart, the MA ribbon trending upside and the upper average acting as a support. The MACD also about to give a buy signal. Be with a positive bias for now. A decisive close above 15,905 points is very big positive for the market.

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