Nifty forms Shooting Star candle

NSE Nifty declined for the second straight day with serious profit booking. The Nifty was down by 149.75 points or 0.83 per cent and settled at 17807.65. Bank Nifty and Fin Nifty declined 1.14 per cent and 1.59 per cent, respectively. Auto, and Media closed at high. PSU Bank index is up by 1.28 per cent. Pharma, IT, and Private sector indices are down over 1 to 1.5 per cent.

The other sector indices closed less than 0.50 per cent. India's VIX delcined by 2.89 per cent. Overall market breadth is positive with 1264 advances and 814 declines. About 90 stocks hit a new 52-week high, and 250 stocks traded in the upper circuit.

The Nifty closed below the prior day's low and tested the Monday low. As the index tested the gap area, the bullish strength has now weakened as mentioned in the previous column. The index has opened with a negative gap and sustained below the previous day's low, which is another sign of weakness. As suggested yesterday, the gap area of 17703-17791 is crucial for the market. In any case, the Nifty fills the gap by closing below 17703 is bearish for the short-term. It took support at 5 EMA today.

The 50 DMA and 200 DMA at an influx point of 17123. A close below 17703 will lead to a 50 DMA cross under the 200 DMA, is the death cross. In fact, the index has retraced 50 per cent of Friday and Monday's sharp 692 point rally. The bullish momentum is stagnant now. On a weekly chart, it is forming a shooting star candle as it closed below the Monday's open. On a 75-minute chart, the moving average ribbon is acted as a support in the afternoon session.

For the last two sessions, the Nifty has formed consecutive lower highs, and today it declined below the Monday low, indicating a downward move on the lower timeframe chart. For now, a move above 17921 is positive for the index, and a decline below 17777 will test 17703. Be cautiously optimistic.

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