Nifty forms neutral bar on Elder Impulse system

After a volatile monthly expiry week, the benchmark indices closed flat to positive. NSE Nifty traded in over 416 points range and finally settled with 52.8 points or 0.34 per cent gain. The BSE Sensex also gained by 0.3 per cent. The broader indices, Nifty Midcap-100 and Smallcap-100, are up by 0.5 per cent and one per cent, respectively. Nifty FMCG, Metal and Realty indices are up by 2.1 per cent to 2.5 per cent. The Nifty Bank declined by 0.26 per cent. The India VIX is up by 3.4 per cent to 21.25. Overall, market breadth is negative during the week. During the last month, FIIs sold Rs58,112.37 crore, and DIIs bought Rs46,599.23 crore. On Friday, the FIIs sold another Rs2,324.74 crore.

The equity benchmarks are reluctant to take a decisive directional bias. The gap opening has become a habit of the market. Almost all five days opened with a gap and moved against the opening levels. It opened with a huge gap on Monday, but was not sustained and formed a bearish belt hold candle. The Nifty failed to move above the weekly opening high. Even on the weekly chart, the bearish belt hold candle structure is intact, though it registered a smart recovery on Friday from the low. As the Nifty formed lower highs and lower low candles in a counter-trend, the price pattern looked like a bullish flag. In a major downtrend, the intermediate trend is up, and the minor trend is waiting for a breakout. So, the breakout will take place when the Nifty decisively crosses the 20DMA, which is currently placed at 15827 points. It also acts as resistance. On Thursday and Friday, the Nifty formed two contradictive candles. On Thursday, it formed a long upper shadow Doji candle, and On Friday, it formed a long lower shadow small body candle. This contradicting behaviour of the price is nothing, but a wavering psychological mindset of the price.

As stated in the previous weeks, the Nifty has to fill the gap 13th June Gap and needs to sustain above the gap area. In other words, the Nifty has to cross the 61.8 per cent retracement of the prior downswing. Currently, this level is at 16178. Before this level, there is another resistance in the gap area at15989, which is 50 per cent retracement. Only above this level expect some strong bullish case scenario. On the downside, the 100 week average has been acting as strong support for the last three weeks. Currently, it is placed at 15405. The previous week's low of 15511 and 15405 zone will be a crucial support zone for the market now. In any case, if the Nifty declines below 15405 decisively, the market will resume the downward move in a faster manner.

The RSI is still hovering around the 45 zone and sloping trendline on the indicator front. As stated earlier, it has to cross above the 55 zone for a bullish reversal. The +DMI is declining and shows declining positive momentum. The Anchored VWAP acted as a resistance for all five days during the last week. The KST and TSI show some bullish strength. On an Elder Impulse system, the Nifty formed a neutral bar on Friday. There is no divergence in the indicators. For now, look for some of the defensive stocks in the FMCG and IT sectors to play a safe game.

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