Time To Exit Long Positions

Now, the 23620, 23755 and 23807 are the crucial resistance zones. To continue the upside move, the index must clear these resistance points. Above these resistance points, the 200DMA of 24039 is the strong resistance zone. A close below 23417 is negative, and it can test the 23222

The positive RBI Monetary policy day, the equities reacted negatively. NSE Nifty declined by 43.40 points or 0.18 per cent and closed at 23,559.95. Nifty Metal index is the top gainer with 2.66 per cent. Consumer Durables, Auto and Commodities indices advanced by over a 0.54 per cent. PSU Bank index and FMCG indices down by 1.38 per cent, and 1.30 per cent, respectively. The Media index is down by 1.01 per cent. The India VIX is down by 3.46 per cent. The market breadth is negative as 1756 declines and 1042 advances. About 69 stocks hit a new 52-week low, and 81 stocks traded in the upper circuit. SBI, Bharti Airtel, HDFC Bank, Trent, and M&M were the top trading counters, in terms of value.

The Nifty closed below the 200EMA for the second consecutive day. It formed another lower high and lower candle. With the last recovery of over 130 points, it formed a Hammer candle. The volumes were higher and escaped the distribution day, as the decline is limited to just 0.18 per cent. But the distribution is clearly evident. On a positive policy day, the flat to negative closing is not good for the market. It has created doubts about the trend reversal. Now, the 23,620pts, 23,755pts and 23,807 are the crucial resistance zones.

To continue the upside move, the index must clear these resistance points. Above these resistance points, the 200DMA of 24,039 is the strong resistance zone. The index closed at the previous day’s low. It closed below the 23.6 per cent retracement level of the recent upswing. It almost tested the 38.2 per cent retracement level. A close below 23,417 is negative, and it can test the 23,222, last Monday’s low. The last strong support is at 23,176, which is a 61.8 per cent retracement level. The 23,176-222 is the last hope for the bulls. If a close below this support any time from now, expect a serious downtrend. The price pattern is bearish for now. Stay away from the long positions as long as it trades below the resistance zone.

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