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Nifty forms Doji candle structure

It formed a higher high, higher low candle, but was not given any clues of a reversal

Equities end marginally lower, extend losses for fifth straight day
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Equities end marginally lower, extend losses for fifth straight day

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The benchmark indices moved in sideways for the day and closed flat. The Nifty closed at 17534.75 with just 9.65 points. The volume was very low. Only the Metal index is up by 1.62 per cent.

And no other index is gained even by half a per cent. The Nifty IT and Realty indices declined by 0.87 per cent each. The broader market breadth is negative as 1085 declines and 795 advances. About 65 stocks hit a new 52-week high and 94 stocks traded in the upper circuit. The India VIX is up by 1.48 per cent. ICICI Bank, Tata Chemicals, and Bajaj Finance were the top trading counters on Wednesday. The Nifty has formed an open high candle, and the candle structure is like a hanging man or a Doji candle. It traded mostly in the first hour's range. It formed a higher high, higher low candle, but was not given any clues of a reversal. There is no change in the trend.

The exhaustion still persisted as the momentum declined. The negative divergence on a 75 minutes chart still exists. The negative broader market breadth is a fresh worry. At the same, the volume was recorded lowest in the last eight months. The RSI has reached above 78 zone and is very near to an extreme possible overbought condition. The Metal stocks protected the index from a big fall.

There is a serious negative divergence in the MACD histogram, which is a very valid one. If the histogram declines below the zero line, we will get a clear directional clue on the downside. As it traded within the first hour's range, it has also not given good trading opportunities. For now, 17566 is the crucial level for an uptrend to continue. Wait for a clear directional bias on the downside. For, it is advised to stay in the sidelines.

(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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