RSI enters above 60 zone

Now, the support has risen to 23138, a move below prior day’s low will be negative. A close below 23,138 will retest 23,230 levels below which the index may fall till 23,130 points. Nifty needs a strong close above 23,400 with an above-average volume for a strong bullish bias

On the weekly expiry day, the equities traded sideways, but the benchmark index closed at a new high with the help of IT sector stocks. NSE Nifty gained by 75.95 points or 0.33 per cent. The Nifty Realty index was the top gainer with 2.24 per cent. The Nifty IT index is up by 1.03 per cent. The FMCG, Private Sector bank, Energy, and Bank Nifty closed with marginal declines. All other sector indices gained by less than a percentage point. The market breadth is positive as 1,684 advances and 1,004 declines. About 190 stocks hit a new 52-week high, and 160 stocks traded in the upper circuit. IRBIT, OFSS, HAL, and Indigo were the top trading counters on Thursday in terms of value.

For the last four trading sessions, the Nifty has moved higher, but formed black candles. On Thursday, it formed an open high candle, which has negative implications. The daily ranges were shurk, and the volatility was cooling off. The Nifty hit another all-time high at 23,481.05 and registered another highest closing with no volume support. It gives strong bullish or bearish signals, though forming black candles. It retraced more than 50 per cent of the previous day’s move, which is called a dark cloud cover. The last four days’ price action indicates exhaustion in the trend. After the first hour, the index traded in a very tight range. For the last four days, the moves are limited to the first hour.

Another heavyweight sector index, Bank Nifty, has formed a most bearish candle; it opened its high of the day, closed at the day’s low, and formed a bearish engulfing candle. Now, the short-term support has risen to 23,138 points. At the same time, a move below the prior day’s low will be negative. A close below 23,138 will retest the breakout level of 23,230 first. In any case, the index declines into the rising channel and tests the 8EMA of 23,130 points. The RSI just entered into the above 60 zone, but it is still flat. The Nifty needs a strong close above 23,400 points with an above-average volume for a strong bullish bias. As mentioned earlier, the index must undergo a retracement toward the 20DMA for a healthy trend. This will give a better entry for conviction-long positions. Now, we can neither be bearish nor strongly bullish. Continuing the existing long positions with a trialling stop loss of the prior bar low is the best strategy.

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