No scope for short positions

Nifty closed at 22040.70 with a 129.95 points or 0.59 per cent gain. The Nifty Auto index is the top gainer with 2.21 per cent. The pharma and IT indices have gained by 1.63 per cent and 1.26 per cent respectively. The energy, PSE and CPSE indices were closed in negative territory. All other sectoral indices gained by 0.18 per cent to 0.99 per cent.

The India VIX was flat at 15.22. The market breadth is positive as 1549 advances and 1005 declines. About 154 stocks hit a new 52-week high, and 121 stocks traded in the upper circuit. HDFC Bank, SBI, BPCL, and ITC were the top trading counters today in terms of value.

The Nifty has registered a second-highest closing after 15th January. And also it registered a fresh high close on a weekly basis. It formed an indecisive candle for the second consecutive day. The index opened at a new high and protected the positive gap for the day. With Friday's move, the new lifetime high is at arm's length. The volumes were continuously declining for the last three days.

Over 500 points rally in the last three days with low volumes may not be trustworthy. Further, the successive indecisive Doji candles show an element of doubt. The Bank Nifty formed an indecisive candle on the hourly chart and witnessed a sudden decline in the afternoon session, indicating exhaustion in the trend.

On the positive side, the MACD has given a fresh bullish signal. The RSI (59.94) is an inch away from the strong bullish zone. The Elder's impulse system has formed a strong bullish bar. The current price pattern is an ascending triangle, formed in the last 23 sessions and meets all the criteria.

As stated earlier, the Nifty’s close above 21127, will result in a breakout. The breakout target is exuberantly much higher side. Be positive on direction, and there is no scope for short positions in the market.

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