Uptrend will continue if Nifty closes above 18,400
Wait for the first-hour close on Monday and trade as per the range breakout rule.
image for illustrative purpose
The equity market closed flat, with nervousness and waiting for a trigger point. The Nifty closed with 17.80 points or 0.10 per cent up and settled at 18314.80. The Nifty Auto index is the top gainer with 0.77 per cent, followed by Banknifty with 0.73 per cent. The Nifty Metal and Energy indices declined most by 1.84 per cent and 1.14 per cent. The Nifty Infra and Pharma indices are also down by over 0.50 per cent. The Advance-Decline ratio is negative at 0.80. About 90 stocks hit a new 52-week high, and 56 stocks traded in the upper circuit. HDFC Bank, Eichermotors, and ICICI Bank were the top trading counters in terms of value.
On a volatile session, the Nifty is able to close flat to positive. But the Nifty futures closed in with a 19.40 points decline. The declines are outnumbered on Friday and recorded lower volume. Before the event, risk on a weekend market is nervous. It opened with a negative gap and recovered into positive territory. It closed above the previous week's high and negated the shooting star candle's bearish implications. For the last four days, the Nifty traded in less than 200 points range, showing that the market is waiting for the trigger. Today it took rising channel support and a prior swing high. Only a close below 18200 will be negative. Otherwise, there is no point in shorting the index. The Nifty premium also declined to 20 points from over 50 points. The India VIX index is back to below 13 and closed at 12.85. The RSI flattened in the bullish zone, and the MACD histogram further declined. This is an indication of a momentum loss. On the upside, it has to close above 18400 decisively for an uptrend to continue. Above this level, the four-day tight-range breakout will lead to a sharp spurt in the price. At the same time, a move below 18200 also will result in knee jerk reaction on the downside. Wait for the first-hour close on Monday and trade as per the range breakout rule.
(The author is Chief Mentor, Indus School of Technical Analysis, Financial Journalist, Technical Analyst, Trainer and Family Fund Manager)
