Stay cautiously optimistic while trading
All bearish candle patterns in recent times failed to get confirmation for reversal and no bearish sign is available as of now
image for illustrative purpose
The new lifetime high is elusive for the India equity benchmark indices. Near the all-time high, the market is struggling to gain strength. NSE Nifty gained by 40.15 points or 0.21 per cent and closed at 18,856.85pts. The Only PSE and FinNifty, were gained by 0.70 per cent, are the top gainers. The Metal index declined by 0.94 per cent. The Auto and FMCG indices ended with minor losses. All other sector indices closed in positive territory. The India VIX rose by 1.44 per cent. The market breadth is negative as the advance-decline ratio is at 0.88. The 156 stocks hit a new 52-week high, and 61 stocks traded in the upper circuit. Shriram Finance, HDFC Bank and PEL were the top trading counters on Wednesday in terms of value.
The Nifty is shy of hitting a new lifetime high third time in the last four days. It missed it by 11.70 points on Wednesday. It formed another indecisive, bearish candle named Dragonfly Doji. All the bearish candle patterns in recent times failed to get the confirmation for reversal. Nothing has changed in the market structure and direction. No bearish sign is available now. For the last four days, attempting a new all-time high has become a herculean task. It is trading above the short and medium-term averages.
The 8EMA support is raised to 18,759 level. As the Nifty closed above the previous high, there is no scope for shorting the market. But, the indecision to move higher is a concern now. As the weekly expiry on the cards, it may be difficult to trade neutral directional strategies as the premiums are unattractive to sell. The Implied Volatility is at the lowest level of 9.19, and the options premiums were not attractive to sell. The index closed 26 points lower than the previous all-time high. It may look like an easy task, but the bulls are thinking differently. Volumes were lower, and the price actions not showing any strength. The Nifty traded in the first-hour range for the day. Even on the hourly chart, the index does not decline below 8EMA. As mentioned earlier, it is better to stay cautiously optimistic or on the sidelines. No evidence has emerged for a bearish direction.
(The author is Chief Mentor, Indus School of Technical Analysis, Financial Journalist, Technical Analyst, Trainer and Family Fund Manager)
