17,944-17,452 important zone for week ahead

The benchmark index gained 150.20 points or 0.85 points on weekly derivatives expiry. As expected last week, the Nifty is consolidating around the 20 DMA. It gained by 172.2 points or 0.98 per cent in the last five trading sessions. It gained 389.7 points from the Friday low. Today the market sentiment is reversed as all the sectors closed in green territory and the market breadth is extremely positive.

The Realty and Auto indices are the top gainer with 6.16 per cent and 4.39 per cent, respectively. The IT index up by 1.79 per cent. The broader indices, the Nifty Midcap-100 and Smallcap-100 indices up by 1.88 per cent and 1.22 per cent, respectively. The market breadth is very positive as 1407 advances and 555 declines. About 128 stocks hit 52 week high and 165 stocks traded in the upper circuit.

The daily ranges are higher than earlier, as it moved at least 200 points for four days in the last five sessions. After just one day close below the 20DMA, and got the bullish confirmation on Monday with a gap up opening and closed above the Doji high. On Thursday, the Nifty has formed an inside bar, as it traded within Wednesday's range. It does not have any trend change implications. The consolidation may continue between the 20DMA(17624) and the previous high of 17748. Below the 17624, the immediate support is at 17452, which Friday's low can be considered as a minor swing low. Unless the index breaks this range decisively, the market will be in a strong uptrend. The benchmark has not made a lower low.

In any case, the Nifty fails to move above Wednesday's high 17,884 points and declines below 17,452 points, and the market structure will change to lower high and lower low, which is a classical minor downtrend. The Nifty still trading below the upward channel for the last five sessions. Even on the weekly chart also, it is forming an inside bar.

Again 17,452 points is a critical level to get the confirmation for the last week's dark cloud cover. The daily RSI has formed lower highs and lows. 58-68 zone is important for the continuation of the reversal signal. The MACD histogram is still in the negative zone. The Elders impulse system is showing the Nifty is in a neutral zone. Pring's KST has given a bearish signal. On Friday, the 17885-17613 is a critical zone. For the next week, 17944-17452 is the important zone. Either side breakouts will give clarity on the trend. Stay cautiously optimistic.

(The author is financial journalist, technical analyst, family fund manager)