Nifty forms Doji candle

The equities were under pressure to move higher after testing the resistance. NSE Nifty gained 36.80 points or 0.19 per cent and closed at 19,443.50 points. The Nifty Pharma and Realty indices were the top gainers with 1.52 per cent and 1.48 per cent, respectively. The FinNifty, IT, and Bank Nifty closed with less than half per cent declines. The Mid-cap and Small-cap indices gained by 0.99 per cent and 0.70 per cent, respectively. The market breadth is positive. About 118 stocks tested the 52-week highs, and 114 stocks traded in the upper circuit. HDFC Bank, ICICI Bank, Zomato and Reliance were the top trading counters on Wednesday in terms of value.

The Nifty tested the 61.8 per cent retracement level of the previous downswing on the ninth day of the present swing. It formed a Hammer candle. The volume was lower in recent times. The positive aspect of today’s trading is that the index closed above the 20DMA and also above the previous day’s high. As stated in the last column, the index must close above 19,463 points for an upside move or a counter-trend rally to continue. A close above 19,463 will test the 19,633 points. From now onwards, strictly follow the trailing stop loss, as the current swing is nine days old. Normally, the counter-trends pullbacks end at 8-10 days.

Today, the Nifty formed a Doji candle, and the volume analysis shows that the selling volume is more than the buying volume. A series of Doji candles in the Nifty and Bank Nifty are the unique features of the current pullback. The RSI is flattened again, as the index failed to move above the first hour high. The hourly RSI and MACD have formed negative divergences. These are the early signs of topping formation. On the upside, the index must close above today’s high of 19,464 points. Above this, it can test 19,633 points. In any case, the index declines below 19,400 will be negative and will give the signal to reversal and end of the pullback rally.