Charts hold trend exhaustion
Nifty traded almost in the previous day’s range; Even on Thursday, it traded in the first hour’s range and closed below the opening level
Short-term Negative
♦ 132 stocks registered a 52-week high
♦ 102 stocks were traded in the upper circuit
♦ A decisive close below 19,600 will test the previous low
♦ Daily RSI is back to below 55 zone
♦ Hourly MACD given a fresh sell signal
Two days after the rally, NSE Nifty closed moderately negative on Thursday. The Nifty ended at 19,794 points, with a 17.35 points or 0.09 per cent decline. The Nifty IT index is the top loser with 1.67 per cent, and the Media index is the top gainer with 3.02 per cent. The Oil and Gas, PSE, and CPSE indices ended with over one per cent gain. The Auto, Metal and Small-cap indices gained over half a per cent. The India VIX has declined by 3.35 per cent to 10.62. About 132 stocks registered a 52-week high, and 102 stocks were traded in the upper circuit. HDFC Bank, Infy, TCS and Reliance were the top trading counters today in terms of value.
Today’s moves show an exhaustion in the trend. The Nifty traded almost in the previous day’s range. Even today, it traded in the first hour’s range and closed below the opening level. The index almost tested the 21st September gap area, but failed to fill it. If it fills the gap area, the index will complete the 61.8 per cent retracement level of 19883. We can’t expect more than this move, as the index closed on the lower end of the last two days’ move. The daily RSI is back to below 55 zone. The MACD has moved above the zero line, which is a positive signal.
The hourly MACD has given a fresh sell signal, which is short-term negative. Though there are no negative divergences visible now, the momentum is clearly waning on the upside. Today’s small decline is with higher volume than the previous day, validating the rally’s exhaustion. For now, the index must close above today’s high of 19,843 for a rally to continue. Above 19,883 points, the immediate target is 19,883 points.
On the downside, a close below the 20DMA of 19,761 is negative and will resume the downtrend. The immediate support is at 50DMA, which is at 19,606 points. For the next 2-5 five trading sessions, the 19,600-19,900 is crucial for the index and the market directional bias. Stay on the neutral or sideways till the range is broken. If the pullback rally ends, we can expect a sharper downside move. As mentioned above, a decisive close below 19,600 will test the previous low. Let us wait and watch the range very closely.
(The author is Chief Mentor, Indus School of Technical Analysis, Financial Journalist, Technical Analyst, Trainer and Family Fund Manager)
