Nifty in consolidation mode
The hourly price pattern looks like a Double Top; A decline below 19,300 will result in a breakdown
image for illustrative purpose
The consolidation continued for the second day, as NSE Nifty traded within Friday’s range. The Nifty gained 83.50 points or 0.43 per cent and settled at 19439.40. The Auto, FMCG, and Pharma indices gained by over one per cent. Bank Nifty, Metal, and FinNifty were the losers by 0.23 to 0.44 per cent. All other sectoral indices were closed with smaller gains. The market breadth is positive as the advance-decline ratio is at 1.44. About 127 stocks hit a new 52-week high, and 71 stocks traded in the upper circuit. HDFC Twing, Reliance, and ICICI Bank were the top trading counters today in terms of value.
The Nifty almost tested the previous all-time high, but failed to surpass it. It formed a Shooting Star candle again. The index closed above the monthly VWAP and above the previous day’s high. The second Shooting Star candle in three days hints a caution at higher levels. The long upper shadow indicates a profit booking at higher levels. A series of lower-high candles with higher volume is nothing, but selling pressure.
In fact, the candle structure is like a Doji at the confluence of all-time highs and is also an indecisive to bearish signal. The immediate support of 8EMA is at 19309, and the VWAP support is at 19393. A close below this 19303-309 support zone is crucial for the ongoing uptrend. On the hourly chart, the moving average ribbon has been acting as strong support for the last three days. The hourly price pattern looks like a Double Top. A decline below 19300 will result in a breakdown. In other words, Friday’s high and low will be the key to a decisive trend, as the last two days of activity are limited within this range. The Reliance has contributed a majority of gains today also. The ITC, Infosys, and L&T contributed significant gains today. Banking and financial services stocks were negative today. As the benchmark index is consolidating, the focus shifted to stock specific. Stay cautious on both sides of the market direction for now.
(The author is Chief Mentor, Indus School of Technical Analysis, Financial Journalist, Technical Analyst, Trainer and Family Fund Manager)
