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Nifty forms long-shadow candles supporting bull trend
The index ending its losing streak, positive divergences on an hourly chart is a positive aspect
The benchmark indices ended 6 day losing streak. The Nifty closed with 56.55 points or 0.37 per cent gain at 15350.15. The FMCG and Fin Nifty led the positive closing with 1.80 per cent and 0.96 per cent gains, respectively. The Nifty IT and Pharma indices also gained by 0.87 per cent and 0.37 per cent, respectively. The Metal and PSU Bank indices were the worst performers with 3.9 per cent and 2.59 per cent.
All other indices ended with over a one per cent loss. The market breadth is extremely negative on a positive day as 1744 declines and just 296 advances. About 489 stocks hit a new 52-week low, and 248 stocks traded in the lower circuit. Reliance, HDFC, and Tata Steel were the top trading counters today on value terms.
The Nifty formed an inside bar and also formed another Doji candle with a long lower shadow. As it formed a higher low candle and closed above 15323, in one way, Monday's price action is positive. But, in another way, the Nifty traded within Friday's first-hour bar for the last 13 hours.
This long indecision is may trigger a massive impulsive move on either side. As mentioned earlier, the Nifty is consolidating after a sharp fall before resuming the prior trend.
The index put unsuccessful efforts to close above Thursday's close of 15360 for the last two days. As it formed long-shadow candles, the indecision is slightly biased towards the bulls, as it formed long lower shadows on Monday. There are positive divergences on an hourly chart. Apart from this, the index ending its losing streak is a positive aspect. As stated on Sunday, the downside is limited.
It is better to avoid fresh shorts. A move above 15400 will lead to an upside breakout. The upside breakout's immediate target is placed at 15886. We cannot expect more than this now. But an hourly close below 15183 will lead to a resumption of a previous trend, which is going to be another impulsive move. For now, be with neutral strategies or be in sideways.
(The author is Chief Mentor, Indus School of Technical Analysis, Financial Journalist, Technical Analyst, Trainer and Family Fund Manager)
