All charts indicating negative signal
The benchmark broke the rising channel support on a closing basis. On an expiry day, intraday sharp moves may occur due to short-covering and Rollovers. Stay cautious
With an extremely negative breadth, the equities declined near last week’s low. NSE Nifty declined by 247.2 points or 1.11 per cent and settled at 21,951.15 points. All the sectoral indices fell on Wednesday. The Nifty Media is the top loser with 3.46 per cent. The Energy, PSU Bank, Realty, PSE, and Auto indices are down by over two per cent. The other sector indices were down by 0.33 per cent to 1.94 per cent. The market breadth is extremely negative as 2,136 declines and 442 advances; about 92 stocks hit a new 52-week high and 184 stocks traded in the lower circuit. Idea, HDFC Bank, JioFin, and Tata Motors were the top trading counters on Wedneday in terms of value.
Before the derivative expiry day, the equities collapsed below the key supports. The Nifty broke the rising channel support on a closing basis. It also closed on the 20DMA support. It closed at a 9-day low. The Nifty registered a distribution day as the decline is with high and above-average volume. With this fall, it has been proven that the ascending triangle breakout was false.
The MACD has given a fresh, bearish signal. The new price pattern also looks like a rising wedge breakdown. The next meaningful support is at 50DMA of 21,788 points, and the prior swing low is 21,600pts. We were suspicious about the breakout as the volumes were missing. The RSI failed multiple attempts to cross the 60 zones and failed. By closing below the 50, the index indicated the weakened trend strength. Importantly, the negative divergence is further confirmation for bearish implications. The previous week’s low of 21,875 points is the immediate support.
On an hourly chart, the index decisively closed below the moving average ribbon, and the MACD is below the zero line. For an upside move, the index closed above 22,050 points decisively with volume support. Otherwise, the index may weaken further and test the 50DMA. On an expiry day, intraday sharp moves may occur due to short-covering and Rollovers. Stay cautious.
(The author is Chief Mentor, Indus School of Technical Analysis, Financial Journalist, Technical Analyst, Trainer and Family Fund Manager)
