RSI Back In Neutral Zone

The 50-week average is now at 23,569 points, which is strong support. The index sustained above the 200EMA, but failed to close above 200DMA. It must close above 24,065 or close below 23,537 points. Post range breakout, the price action will be impulsive and volatile

The benchmark indices failed to sustain the initial gains on another dull trading day. The Nifty gained 63.20 points or 0.27 per cent and closed at 23,813.40 points. Nifty Pharma is the top gainer at 1.30 per cent. The Auto and Healthcare indices are up by 0.97 per cent and 0.80 per cent, respectively. The PSE declined by 1.07 per cent. The Metal, PSU Bank, Realty, and CPSE indices declined by over 0.50 per cent. The India VIX is down by 5.68 per cent to 13.23. The market breadth is positive as 1,431 advances and 1,391 declines. About 59 stocks hit a new 52-week low, and 85 stocks traded in the upper circuit. Mobikwik, Greaves Cotton, Dam Capital, Amber and Tata Motors were the top trading counters in terms of value.

The Nifty failed to sustain the gain again. It formed a Gravestone Doji candle. The 200DMA acted as resistance for four consecutive days. The volumes were flat and much below the average. The week’s volumes were the lowest in recent history. The Nifty spent all four days within the last Friday’s range. It moved in just 291.65 points range. On the weekend, the last hour’s selling pressure with higher volume indicates that the traders do not carry forward the positions for next week. The 50-week average is now at 23569, which is strong support. The index sustained above the 200EMA but failed to close above 200DMA. With this session’s positive closing, the RSI is back in the neutral zone. The MACD histogram shows a decline in the bearish momentum. As long as the index trades in last Friday’s range, it’s difficult to find a directional trade. It must close above 24065 or close below 23537. Post range breakout, the price action will be impulsive and volatile. For now, it is better to be on the sidelines and wait for a breakout.

(The author is partner, Wealocity Analytics, Sebi-registered research analyst, chief mentor, Indus School of Technical Analysis, financial journalist, technical analyst and trainer)