NSE Nifty breaks out 22-day flat base

The Nifty closed above the multiple parallel highs of the recent past. It gained 70.25 points and settled at 15924.2 points. It closed at a new lifetime high. It gained by 196.3 points or 1.25 per cent in the last five trading sessions and settled at 15,924.2 points. This low volume breakout will have a low probability of success. The Nifty Realty index is the top gainer with 4.2 per cent. Smallcap-100 index up by 0.95 per cent. Barring, pharma, auto, media all other sectoral indices up by half a per cent. The Auto index was down by 0.40 per cent, and the Media index declined by 0.35 per cent. The overall market breadth is negative as 1,029 declines and 914 advances. About 242 stocks hit a new 52 week high, and 148 stocks traded in the upper circuit.

Finally, the Nifty has broken the 22 days flat base with a renewed bullish bias. It opened with a positive tone, broken out of the flat base after one hour of trading. This decisive, strong bullish candle has put an end to wavering moves. It closed above the upper Bollinger band and above the upward resistance too. As we are mentioning about 7th time testing could be a breakout. What exactly happened on Thursday. Now, it needs to register a follow-through day with closing above today's high or in positive territory. The RSI moved above the prior swing high and broke the double bottom pattern, is a positive sign for the market. In any case, the follow-through day is reality tomorrow, and the MACD will give a fresh buy signal.

The weekly candle moved above the previous week's high. A weekly closing above the 15,915 points after five weeks of tight consolidation is a big positive for the market. The broader market participation is another good indication of a bullish trend. As the 22 day-tight consolidation has broken, expect a sharp retracement on the upside towards 16,200 and above. But as the Nifty declined in the last hour, is giving a sense of profit booking at higher levels. Though it closed above the prior swing highs, the sharper retracement is missing. For now, be with a positive bias as long as it makes higher highs. In any case, it fails to close in positive territory on Friday, and we need to be cautious on the long positions.

(The author is financial journalist, technical analyst, family fund manager)