Wait for follow-through day to confirm upward move
Nifty to resume upward move post 20-point resistance zone. It failed to get the confirmation to yesterday's bearish engulfing pattern and prior day's bearishness vanished as it moved above the 50 DMA again with a higher volume
The Indian benchmark indices sharply reversed their losses and closed in the positive territory. The Nifty closed at 17315.50 with 197.90 points or a 1.16 per cent gain. Barring Realty, FMCG, and Pharma, all sectoral indices closed with a decent gain. The Nifty IT index is the major gainer for the day with 1.97 per cent. The Energy, Auto, and Infra indices also advanced by over one per cent. The India VIX is down by 2.24 per cent. Initially, the market breadth was negative, but finally, it turned positive with 1080 advances and 962 declines. About 51 stocks hit a new 52-week high, and 107 stocks traded in the lower circuit. Reliance, HDFC and Paytm were the top trading counters.
NSE Nifty reversed previous day's losses and closed above the Thursday closing. Opened on a flat note, it sharply bounced from the 200DMA. A sharp reversal of Banking and IT stocks helped the Nifty move higher. The Index gained over 325 points from the day's low, and Banknify traded in the 1085 points. Soon after opening, the Nifty has broken down the rising trendline support. On a 75-minutes chart formed a base at 34EMA support and sharply gained to above the trendline. The Nifty once again tested the 61.8 per cent retracement level. It also failed to get the confirmation to yesterday's bearish engulfing pattern. The prior day's bearishness vanished as it moved above the 50 DMA again with a higher volume. Today's low of 17006 or 200DMA will act as crucial support. Traders were surprised with a sudden spurt and forced to square off the short positions. The benchmark index has formed three successive parallel highs at the 17334-353 zone. Once this 20 points zone of resistance clears, the Nifty will resume the upward move again. Let us wait for the follow-through day to confirm the upward move. For now, 17000-353 zone will be the deciding zone, and either side break will result in another day of an impulsive move.
(The author is Chief Mentor, Indus School of Technical Analysis, Financial Journalist, Technical Analyst, Trainer and Family Fund Manager)
