Nifty hovering in non-directional trading
Wait for a first-hour bar to close for a directional trade; Above the first hour high will give more conviction on the bullish reversal, otherwise, exit the long positions; Nifty forms Evening Star kind of candle; Bears to resume their attack if index opens negatively and closes below 17,107 level
image for illustrative purpose
Before the Federal Reserve meeting, the domestic equity market was nervous and traded in sideways. The Nifty closed at 17,151.90 points with 44.0 points of 0.26 points gain. Only the Pharma index is able to gain over one per cent. All the sector indices closed with just less than half a per cent. The Nifty and Bank Nifty closed with a 0.26 per cent gain, but the decline in Open Interest shows long unwinding happened. The market breadth is negative as 1,180 advances and 738 declines. The volatility index, India VIX, is down by 1.82 per cent to 14.80. About 84 stocks hit a new 52-week low, and 81 stocks traded in the upper circuit. ICICI Bank, Infosys, and Reliance were the top trading counters on Wednesday in terms of value.
The Nifty opened with a positive gap and failed to sustain at the opening highs. It formed lower-high candles and closed near the first hour low. It has not given any directional trade today. The Nifty just closed above the valley point of the Double Bottom on the hourly chart, but the breakout does not have any conviction. The momentum completely wanes as it reaches to the key resistance zone. As the event risk is scheduled, the traders played a safe game today. Volumes were declined. They were less than half of the Friday volume. On a daily chart, the Nifty has formed an Evening Star kind of candle. In any case, if the index opens negatively and closes below 17107 points, the bears will resume their attack. On the downside. The 17,107 will be the immediate support, and 17017 will be the next level of support. On the upside, the index has to sustain above 17145 for a bullish reversal. Above this, it can test the 20DMA of 17328, which is also 10 weekly average. A weekly close above this will give us a strong retracement towards the 200DMA. Whatever the Federal Reserve’s decision, wait for a first-hour bar to close for a directional trade. Above the first hour high will give more conviction on the bullish reversal. Otherwise, exit the long positions.
(The author is Chief Mentor, Indus School of Technical Analysis, Financial Journalist, Technical Analyst, Trainer and Family Fund Manager)
