Cart indecisive bars suggest a directionless market

The markets did not sustain at higher levels. With the selling pressure at a higher level, the Nifty declined sharply from the highs. The Nifty declined by 39.95 or 0.25 per cent and settled at 15692.15. The Auto, Pharma, Fin Nifty, and Bank Nifty indices advanced by 0.1 per cent or o.92 per cent.

The fall was led by the Energy index with a 1.19 per cent decline. Metals, IT and Realty indices declined over 0.50 per cent. The VIX is up by 1.19 per cent. The market breadth is negative as 1147 declines and 967 advances. About 80 stocks hit a new 52-week low, and 101 stocks traded in the upper circuit.

The Nifty has formed an inside bar and closed near the day's low. It declines over 100 points from the day's high. As it also formed a shooting star candle for the second successive day, it is a weaker signal. For the last three days, 15671 has been held on a closing basis. In fact, the index is trading within Monday's range. It failed to enter the gap area. The broader market actions have been mostly range-bound for the last two days. 15886-15659 range has to be a break for a decisive directional bias.

The momentum further increased on the downside. On a 75 minutes chart, the indecisive bars suggest a directionless market. The market is waiting for a trigger probably; the Federal Reserve's interest rate decision is scheduled Wednesday's night. Only in case of a positive or neutral stance market may bounce.

If the Fed raises the interest rate, the markets worldwide would collapse. For now, it is better to wait for key levels to be tested for directional view. A move below 15670 is negative, and it can test 15350 with no time. Monday's high 15886 will act as key resistance. Avoid highly leveraged positions.

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