Nifty forms series of hanging man candles on charts

The domestic equities rallied above 17900 levels with broader market participation. The frontline index, Nifty gained by 119 points or 0.67 per cent and settled at 17944.25. Only the Nifty Auto index closed with a 0.42 per cent decline, and all other sector indices were in the green territory. The Nifty PSU Bank index is the top gainer with 1.16 per cent and the IT index advanced by 1.16 per cent. All the other sector indices advanced by half a per cent on average. The market breadth is positive as 1169 advances and 713 declines. About 83 stocks hit a new 52-week high, and 99 stocks traded in the upper circuit. Bajaj Finance, Zomato, and Bajaj FinSv stock were the top trading counters in terms of value.

The Nifty rallied for the sixth successive day and closed above 17900. It opened with a positive gap again and ended at almost at the day high. There have been four positive gaps in the last five days. The supports are further inched up to 17634. The prior swing high is at arm's length at 18115. The RSI has reached 83.69, but the momentum is still lagging.

Currently, there are no other signs of weakness available. The negative divergence on a 75-minute chart also failed to get confirmation as of Wednesday. The MACD histogram is flat. The relative strength line is also flat. The RRG RS line is on the 100 zone and declining. The RS line is not making any new high when the price is almost at the new high.

The futures volume declined further, recorded the lowest this year. On a 75-minute chart, the Nifty has formed a series of hanging man candles on Wednesday. As the daily candle is very strong, we cannot assume that the market may retrace. As long as the prior day's low is protected, the rally will continue to 18115. Let us wait for the index behaviour at this level.

(The author is Chief Mentor, Indus School of Technical Analysis, Financial Journalist, Technical Analyst, Trainer and Family Fund Manager)