Nifty forms long-legged small body candle

For an up move to continue, it has to clear resistance level of 15563, above this level the index can test the gap area or last week's high of 15886; a close below Thursday's low of 15367 will resume the down move

The weekly derivatives expiry saw high volatility. NSE Nifty traded in over 260 points range with big swings. Finally, it closed at 15556.65 with 143.35 points or a 0.93 per cent gain. The Auto index outperformed today with a 4.39 per cent gain. Only the Energy index closed 0.42 per cent negative. The Nifty IT index is up by 1.96 per cent, and Pharma gained by 1.58 per cent. Media and Realty are also up by 1.5 per cent each. The broader indices Midcap-100 and Smallcap-100 advanced by 1.21 per cent and 1.31 per cent, respectively. The other indices were up by over 0.5 per cent to 1.5 per cent. The market breadth is positive as 1426 advances and 629 declines. About 84 stocks hit a new 52-week low, and 90 stocks traded in the upper circuit. Reliance, Maruti and TCS were Thursday's top trading counters on value terms.

After a rollercoaster ride, the Nifty has formed a long-legged small body candle. Yesterday's price action reflects the big volatile days coming soon. Though it closed positively, both long and short positions triggered stop losses. In the last five trading sessions, the Nifty gained by 196.05 points or 1.27 per cent. It has formed another lower-low candle and traded below Tuesday's high. Once again, the Nifty faced resistance at 8EMA. The price failed to move above Tuesday's high, but RSI did.

On a 75-minute chart, the Nifty faced resistance at a sloping trend line. It closed in a moving average ribbon, showing neutral bias. The MACD line just moved above the zero line. As the Nifty is in moving in a counter-trend, as long as 15385 is protected with a positive bias. Volatility is the nature of the market. Even in volatile conditions, follow the market price action. The Nifty failed to close above the 23.6 per cent retracement level (15563) of the prior downtrend. On Wednesday, also it faced resistance at the same level. For an up move to continue, it has to clear this resistance first. As discussed earlier, above this level, the index can test the gap area or last week's high of 15886. A close below Thursday's low of 15367 will resume the down move. The current counter is five days old. Expect another 2-3 days to continue this consolidation.|

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