Nifty forms Spinning Top candle

NSE Nifty made a new lifetime with a lot of nervousness. It closed above 25,000 for the first time. The benchmark index gained by 59.75 points or 0.24 per cent and closed at 25,010.90 points. The Energy index is the top gainer with 1.97 per cent. The CPSE is up by 1.81 per cent. The Commodities and PSE were up by 0.67 per cent and 0.45 per cent. On the flip side, Nifty Realty index is down by 1.70 per cent. The PSU Bank index is down by 0.99 per cent. The Small-cap and Mid-cap indices also down by 0.99 per cent and 0.98 per cent. All other indices gained or lost by less than half a per cent. The India VIX is down by 2.42 per cent to 12.93. The market breadth is negative as 1,750 declines and 980 advances. About 208 stocks hit a new 52-week high, and 120 stocks traded in the upper circuit.

Adani Energy Solutions, Maruti, Adani Green, and HDFC Bank were the top trading counters on Thursday, in terms of value.

Nifty has opened with a positive gap above the last three-day tight zone. The index finally closed above 25,000 in four days of the tight range. It formed an evening star candle at the new high. The Nifty has met our target of 25,056 and made a new lifetime high at 25,078.30 points. The Evening Star candle is a spinning top candle in an exhaustion pattern. In any case, the index opens with a negative gap and closes negative, which will give a reversal signal. The Spinning Top candle formed with a massive volume, the highest in after the Budget day. It is a sign of distribution. The index is moving higher, but the RSI is unable to move above the prior high. The negative divergence will emerge if the Nifty closes negatively tomorrow. The hourly RSI is about to get a confirmation for its negative divergence implications. During the last hour on the weekly derivatives expiry day; the index sharply bounced, with a short covering.

Thursday’s new high close with very negative market breadth is a worry now. Even on the weekly chart, the Nifty has formed a Hanging man candle, which is also a sign of maturity in the trend. In the end, the index closed below the opening, which is a negative. But there are no confirmed weakness signals. Many of the weak signals in recent times have failed to confirm their implications. So, this time also, unless there are confirmed weak signals, stay with the trend. Now, the 8EMA support rose to 24,792 points, which is also the lowest for the last four days. Only a close below this crucial support may the index give the reversal signal. It is better to hold the long positions with a strict stop loss. Any sharp decline may hurt the profits on the table.

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