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Index forms multiple parallel bottoms
As Nifty closed below the Bollinger lower band, so expect some consolidation before resuming the trend; short-term bounces are common in this bear mkt
15886-15659 zone is crucial for both directions, it needs to close above the 15858 on an hourly basis to test the gap area. Above 15858, it can test 16100; stop losses must be a little higher compared to the normal levels
For the third consecutive day, the benchmark indices closed lower on high volatility. Selling pressure on every higher level is intensifying. The Nifty closed with 42.30 points or a 0.27 per cent after 200 points volatility. It settled at 15732.10. The Bank Nifty, Fin Nifty, Auto, Energy and FMCG indices are down by less than half a per cent. And Nifty Realty is the top gainer with 0.81 per cent. The Nifty IT, Pharma, Metal and Infra indices are also up by less than half a per cent. The market breadth is negative as 1162 declines and 914 advances. About 139 stocks hit a new 52-week low, and 85 stocks traded in the upper circuit. Reliance Adani Enterprises and Bajaj Finance were the top trading counters on value terms today.
The Nifty tested the 8th March low on Tuesday on opening. Later it bounced to the previous day's opening level. The 193-point bounce from the opening low did not sustain till the end. With the profit booking at higher levels, it formed a shoot star kind of candle. Though it retested the 15670, the bears failed to close below the previous low. Now it may consolidate for some time before closing below the 15671. There was hidden divergence on a 75 minutes chart. It needs to close above the 15858 on an hourly basis to test the gap area. Above 15858, it can test 16100, as we stated in earlier columns. The MACD is about to come out of the same hourly chart. These moves hurt the positions on either side. We expected that short-term bounces are common in this bear market. The stop losses must be a little higher compared to the normal levels. As the Nifty has formed multiple parallel bottoms, and as long as these bottoms are protected, be cautious on the downside. The Nifty also closed below the Bollinger lower band, so expect some consolidation before resuming the trend. MACD histogram shows an increased momentum on the downside.15886-15659 zone is crucial for both directions.
(The author is Chief Mentor, Indus School of Technical Analysis, Financial Journalist, Technical Analyst, Trainer and Family Fund Manager)
