MACD indicates fresh sell signal
For all long positions, the prior bar low is the strict stop loss
The low VIX and low Implied Volatility (IV) are indications of a probable storm in the near term. With a negative advance-decline ratio, the fall is clearly indicating the exhausion. In any case, if the index fails to move above Tuesday’s high, it will be a sign of a counter-trend
The benchmark indices came off from the record highs. With a profit booking, NSE Nifty closed at 22,642.75 with 23.55 points or 0.10 per cent decline. The Metal index is the top gainer with 1.13 per cent, and the Media index is the top loser with 1.26 per cent. All other sector indices gained or lost by less than a per cent. The India VIX has declined by 2.2 per cent to 11.35. The market breadth is negative as 1,477 declines and 1105 advances. About 157 stocks hit a new 52-week high, and 99 stocks traded in the upper circuit. Gland, Exide Industries, Hind Copper, and HDFC Bank were the top trading counters on Tuesday in terms of value. ICICI Bank and Infosys have contributed over 51 points Tuesday, and Reliance dragged the index by 27.79 points.
The Nifty opened with a half-percent gain and hit a new lifetime high of 22,768.40 points. It then declined to 22,612.25 points, with a higher volume. On an hourly chart, the index formed lower high candles and failed to move above the prior bar high. The Relative Strength declined further compared to the broader market index Nifty-500. The Index has formed an open high candle, which is a negative signal for the ongoing trend. The RSI is back to the below 65 zone. The hourly RSI has already entered the neutral zone, and the MACD has given a fresh sell signal. With a negative advance-decline ratio, Tuesday’s fall is clearly indicating the exhausion. In any case, if the index fails to move above Tuesday’s high, it will be a sign of a counter-trend. A close below 22600 is negative and may result in profit booking. The 8EMA support is at 22487. Expect a counter-trend consolidation on the early weekly expiry day. The low VIX and low Implied Volatility (IV) are indications of a probable storm in the near term. For all long positions, the prior bar low is the strict stop loss. Let watch the 8EMA and Tuesday’s high as critical support and resistance.
(The author is Chief Mentor, Indus School of Technical Analysis, Financial Journalist, Technical Analyst, Trainer and Family Fund Manager)
