Wait for Nifty to surpass 18,665pts
Nifty closed above moving average ribbon along with the MACD line above the zero line, which is bullish; However, currently, the volume is a big concern; The rally without volume support is not trustworthy to rely on
image for illustrative purpose
The market continued the recovery from Monday's low and closed higher above the previous day's high. NSE Nifty gained by 110.85 points or 0.60 per cent and closed at 18,608 points. The PSU Bank index continues to rally by 3.81 per cent. The Nifty IT index recovered by 1.12 per cent. The Bank Nifty, FinNifty and CPSE indices gained over 0.5 per cent. The Realty index is the top loser with 0.80 per cent, and FMCG and the Media indices closed marginally lower. All other indices gained by less than half a per cent. The market breadth is positive as 1014 advances and 880 declines. About 87 stocks hit a new 52-week high, and 82 stocks were traded in the upper circuit. Yes Bank, HDFC Bank, and Kotak Bank were the top trading counters today in terms of value.
The Nifty ended its seven-day declining phase and closed decisively above the previous day's high. The index also closed above the 5 and 8EMAs. The Nifty also closed above the crucial 20DMA. It acted as a support today. But it's still below Friday's high of 18,665 points. This may act as a resistance for Wednesday. Above this level, the Nifty can test the 2nd December's gap area of 18752. The 18345, which is Monday's low, can be considered a minor swing low.
Now, the question is, will the Nifty surpass the previous high? Or will it form a lower high below the 18887? We will get the clarity by this weekend or mostly by mid next week. After two days of domination, the negative movement indicator -DMI declined below the +DMI. The RSI took support at the 55 zone for two days and bounced above the 60 zone, which is strongly bullish. On an hourly chart, the Nifty closed above the moving average ribbon along with the MACD line above the zero line, which is bullish. Currently, the volume is a big concern. The rally without volume support is not trustworthy to rely on. Wait for Nifty to surpass the 18665 to be with a strong bullish bias. Any decline from this level will be negative in the short term.
(The author is Chief Mentor, Indus School of Technical Analysis, Financial Journalist, Technical Analyst, Trainer and Family Fund Manager)
