Nifty defies bearish candlestick patterns

Back In Positive Breadth

• 1,444 advances
• 1,077 declines
• 249 stocks hit a new 52-wk high
• VIX is up by 2.11%
• RSI back inextreme zone

The most bullish global markets influenced the domestic market with a massive rally. NSE Nifty gained 256.35 points or 1.23 per cent and closed at 21,182.70 points. Only the Nifty Media index was negative by 0.38 per cent. The Nifty IT index led the market rally with 3.50 per cent, and the Realty index by 3.88 per cent. The Bank Nifty and FinNifty indices are up 1.36 per cent each. All other indices gained by half a percent on average. The India VIX is up by 2.11 per cent to 12.32. The advances were outnumbered by 1,444, and the declines were 1,077. About 249 stocks hit a new 52-week high, and 104 stocks traded in the upper circuit. IRFC, HDFC Bank, IREDA, Hudco, and Reliance were the top trading counters today in terms of value.

The Nifty had come out five days wavering moments. The Federal Reserve hinted that interest rate cuts in the near future have fuelled the sentiments in the equity market across the globe. The Nifty made a new high today, with an increased volume, showing fresh buying interest.

As mentioned earlier, there is no weakness in the trend. It only consolidates for a week and bounces sharply higher. This 2,373 points, or 16.37 per cent rally in the last seven weeks, is the highest percentage in the shortest period in recent history. The index closed above the Bollinger bands for the second week on a weekly chart. On the daily chart, the upper Bollinger band is rising vertically, which is an indication of the overstretching of a rally. At the same time, as there is no weakness in any timeframe, we can’t be against the trend.

The recent bearish candlestick patterns failed to get confirmation for their implications. The RSI is back in the extreme zone. The weekly RSI will be at its highest level after October 2021. In this condition, we can only be optimistic with proper risk management. Now, the support level has risen to 20,883 points, which is 8EMA. A close below today’s low of 21,074 also will give initial signs of weakness. In other words, today’s gap is crucial for the rally to continue. On the upside, the immediate target is at 21,325 points. Above this, it can test 21,421 points. We can’t forecast more than this. Stay vigilant and cautiously optimistic. Protecting the profit is our primary aim now.

(The author is Chief Mentor, Indus School of Technical Analysis Financial Journalist, Technical Analyst, Trainer, Family Fund Manager)