Charts indicating possible profit booking

The Nifty closed above the 14,850 level and near the resistance on the first day of the financial year. The metals shined today and led the market rally with an over 5.3 per cent rise. The Nifty gained 176.65 points or 1.2 per cent.

The PSU Bank index up by 2.63 per cent and the Bank Nifty advanced by 1.66 per cent. Barring, FMCG index, all other sectoral indices closed in positive territory. The market breadth positive today as advances outnumbered the declines.

The broader indices Nifty-500, mid and smallcap indices outperformed the benchmark indices today with over 1.5 per cent gains. In a truncated week, the Nifty consolidated further.

In three days of trading, the Nifty moved higher by 542 points or 3.79 per cent. First two days of big up move and the last two days of consolidating within Tuesday's price action has not given any clues for near term trend. It tested the previous week's high on Monday, but failed to close above it. It also formed the parallel highs at 14,875-80 levels.

The price structure on a 75-minute chart resembles an inverted head and shoulders and the 14,875-80 parallel line as a neckline. In any case, a close above this neckline is a positive sign for the market. Though the market maintained the positive momentum most of the time, the advance-decline ratio is not so encouraging. The Nifty formed a perfect Doji candle on a Monthly candle of March. Before this, two long upper shadow candles, which resemble a bearish candlestick pattern, a shooting star is indicating profit booking at the higher levels.

The Nifty is oscillating around the 50DMA for the last 11 trading sessions. This is the first time since March low, it indecisive to move above to it. After two days of attempt, it finally able to close above the 20DMA, which is an early positive sign. During the last financial year, the Nifty rose by 6,092 points or 70.87 per cent.

Since last March, none of the monthly candles has closed below the prior bar's low. As the Nifty consolidating within the 1,000-point range between 15,431-14,469, it is important to move either for a decisive trending move. In any case, it closes below the recent low of 14,264 on a weekly closing basis, which will confirm the 15,431 is an intermediate top. But a move above the 15,100 - 15,336 will be a sign of resumption of an uptrend.

- The writer is a financial journalist, technical analyst, trainer and family fund manager