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Nifty forms a lower high and lower low candle

Indicators give a bullish confirmation and MACD gives a buy signal; as the monthly expiry is nearing, the volatility will increase

Nifty forms a lower high and lower low candle
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Nifty forms a lower high and lower low candle

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The equities are able to recover from the lower levels, and benchmark indices closed positively. The recovery was led by the Metals and Auto sectors. The Nifty is higher by 18.15 points and closed at 15850.20 points. The Bank Nifty is down by 0.50 per cent. The Fin Nifty also declined by 0.59 per cent. The Pharma closed flat to negative. The Metal and Auto indices are up by 1.67 per cent and 1.25 per cent. The other sector indices gained less than a per cent. The market breadth is positive as 1112 advances and 943 declines. About 17 stocks hit a new 52-week high, and 102 stocks traded in the upper circuit. Reliance, M&M, and ONGC were the top trading counters on Tuesday in value terms.

The Nifty closed flat to positive as it recovered over 180 points from the day low. As the monthly expiry is nearing, the volatility has increased. The day's swings resembled expiry-day volatility. The opening gap was filled by noon and declined sharply in the 20 minutes. But, the short-covering has led to the recovery. The rollovers are just 46 per cent, which is less than last month's three and six months average. The traders are convinced about the trend to roll over the positions. As Nifty has formed a lower high and lower low candle, it is better to have a cautious upside. The RSI needs to cross the 55 zone for a bullish confirmation, which is currently at 47.11. The MACD has given a buy signal. The 20DMA is placed at 15947, which is crucial and immediate resistance. The market may experience very high volatility for the next two days. Let us hope for a decisive above 16947. In any case, if the Nifty closes negative, the down move will resume.

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

T Brahmachary
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