Bollinger Bands Indicate End Of Expansion
On the upside, only a move above 23,350 is positive and can resume the up move; For now, it is better to stay away from building fresh positions
Bollinger Bands Indicate End Of Expansion
The equity indices tumbled after a resilient move in previous session. NSE Nifty is declined by 345.60 points or 1.49 per cent and closed at 22,904.45. Only FinNifty and FMCG indices closed with moderate gains. The Metal index was the top loser with 6.56 per cent, followed by Pharma with 4.03 per cent. the Energy, Commodities, Microcap, Realty, IT, Smallcap, CPSE, PSE, and Healthcare indices declined by 3 - 4 per cent. All other indices are down with significant losses. The India VIX is up by 1.14 per cent to 13.76. The broader market breadth is negative as 2230 declines and 646 advances. About 66 stocks hit a new 52-week low, and 146 stocks traded in the upper circuit. HDFC Bank, Reliance, BSE, TCS, and Tata Motors were the top trading counters in terms of value.
Last week’s Evening Star Doji candle gets the confirmation for its bearish implications as the Nifty closed much below it. The Index also closed below the 50 per cent retracement level of the previous 1905 points or 8.67 per cent rally. The Nifty closed below the 50DMA and 10-week average. It also closed below the 20DMA. As the volumes were higher on a 1.50 per cent decline day, the index has registered a distribution day. Volumes were highest in the last five days. The Bollinger Bands began to contract, indicating the end of the expansion. The RSI declined below the 50. The MACD is about to give a fresh, bearish signal. The Nifty is decisively below the 23,350 and ended the bullish bias. It has also filled the 20th March gap. The next reasonable support is at the 61.8 per cent retracement level of the prior upswing, which is located at 22,372. Below this, the index can test the prior low of 21,964. On the upside, only a move above 23,350 is positive and can resume the up move. For now, it is better to stay away from building fresh positions.
(The author is partner, Wealocity Analytics, Sebi-registered research analyst, chief mentor, Indus School of Technical Analysis, financial journalist, technical analyst and trainer)
