Avoid Fresh Long Positions For Now

In any case, it closes below session’s low of 24,216pts, it will confirm the reversal. The low of 24,119 is crucial support. If the reversal is confirmed, the index will test 23,742 by next week. Negative divergence in daily RSI to get confirmation if it closes below 24119

NSE Nifty ended its seven-day winning streak. The Nifty declined by 82.25 points or 0.34 per cent and closed at 24,246.70 points. A majority of sector indices were in negative territory. The pharma is the top gainer with 1.08 per cent. The Microcap, Healthcare indices gained 0.40 per cent. The Realty and FMCG indices declined by over one per cent.

The Consumption, Services, FinNifty declined over 0.50 per cent. The India VIX is up by 1.82 per cent to 16.25. The market breadth is negative as 1,441 declines and 1,404 advances. About 42 stocks hit a new 52-week high, and 117 stocks traded in the upper circuit. HDFC Bank, ICICI Bank, IndusInd Bank, Warre Energy and BSE were the top trading counters in terms of value.

In a narrow trading range day, the index closed at the low of the day. The volumes were much lower than the previous day. As mentioned earlier, the momentum further declined. On a derivatives expiry day, the index traded in a narrow range with low volatility. The Rollovers were at 70.52 per cent, much lower than the last three month average.

On an hourly chart, RSI negative divergence gets the confirmation for its implications. The index formed an inside bar. In any case, it closes below session’s low of 24,216, which will confirm the reversal from the top. The Wednesday’s low of 24,119 is the crucial support for now. The next support is at Monday’s gap area. If the reversal is confirmed, the index will test 23,742 by next week. The negative divergence in daily RSI will also get confirmation if it closes below 24,119. For an upside, the index must close above 24,359 to resume the upside. The neutral to bearish strategies works well for next one week. Avoid fresh long positions.

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