Friday's closing very crucial
As ascending triangle failed, breakdown repercussions will be extremely bearish
image for illustrative purpose
The equities declined for the second consecutive day. The benchmark indices fell sharply as the broad-based selling. The Nifty closed below 15,000 once again, at 14,906.05, with 124.10 points or 0.83 per cent decline.
As suspected earlier in these columns, the metal index is coming out of overbought condition and fell by 3.21 per cent. The BankNifty fell by 1.04 per cent, and the FinNifty declined by 0.93 per cent. Barring realty and PSU bank indices, all other sectoral indices closed in negative territory. The VIX up by 1.73 per cent. The market breadth is 1:1 as the 949 advances and 952 declines. 142 stocks hit the new 52 weeks high and 155 stocks in the upper circuit.
The Nifty gained 209.55 points or 1.42 per cent in the last five trading sessions. It fell sharply by 231.2 points from Tuesday's high. It traded in the 545 points range in the last five trading sessions. The Nifty closed below the 38.2 per cent retracement level of the Monday and Tuesday rally.
After two days of euphoric move and a breakout, it failed to sustain the momentum. The low volume breakout failed to get follow-through days. It closed below the May 10 swing high and tested the prior multiple resistance line of 14,880. With this, an ascending triangle and the inverted head and shoulders patterns breakout failed. Barring PSU banks and realty indices, all the sectoral indices declined, and the negative market indicates the inherent weakness in the market.
On a weekly chart, thought one more day left, the Nifty is forming a shooting star candle, as it already declined over 50 per cent of the current candle. It closed below the five EMA but took support at eight EMA. A close below the 14,850 on Friday will be a breakdown of an ascending triangle.
As this pattern already failed, the breakdown repercussions will be extremely bearish. In this background, today's weekly closing is very critical. In a bull case scenario, the Nifty closes above the 14,970, the index will regain the short-term strength. Wait for the weekly bar to close to find out a direction for the near future.
(The author is financial journalist, technical analyst, family fund manager)
