As a result, Nifty formed a doji candle with a higher-high and higher-low price structure. On the weekly chart, the index snapped its three consecutive weeks of losses and formed a bullish candle. The advance-decline ratio was flattened and settled around 1:1.
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From a technical perspective, the index took resistance around its 200-EMA, which is currently placed around 23,620. The 14-day, relative strength index (RSI), continues to trend upward and is currently positioned around 51–52. Another technical indicator, the moving average convergence/divergence (MACD), has turned above the positive crossover but is still trending below its central line.
According to O’Neil’s methodology of market direction, we are changing the market status to a Rally Attempt. Tuesday’s session was considered day one of an attempted rally as Nifty closed in the green. The index did not breach the correction low of 22,787 since day one.
Hence, today’s action qualifies as day three of an attempted rally. So, we are changing the market status to a Rally Attempt from a Downtrend. From here, we would prefer to see a follow-through day before shifting the market to a Confirmed Uptrend. On the flip side, if Nifty breaches its recent low of 22,787, the market will be moved back to a downtrend.
The index faced strong resistance around its 200-EMA. Moving forward, sustainable trading at the 23,600–23,650 may lead the index toward 23,800, followed by 24,000–24,200 in the coming days. However, failure to cross and hold above 23,600 may result in continued volatility with a negative bias.
How Nifty Bank performed?
Bank Nifty started on a muted note and traded volatile on the Union Budget day presented by Finance Minister Nirmala Sitharaman. The index fell sharply from the day’s high of 50,009 and registered an intraday low of 48,925 on Saturday. It formed a ‘high wave doji’ candlestick pattern on the daily chart. On the weekly chart, the index formed its first bullish candlestick after the formation of four consecutive bearish candles. On Saturday, it opened at 49,592.55, fluctuated between 50,009.50 and 48,925.45, and closed at 49,506.95, marking a 0.02% loss.
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The 14-day, (RSI, has flattened and is currently placed around 49 on the daily chart. The MACD also shows a positive crossover on the daily chart, though it is still below the central line.
According to O’Neil’s methodology of market direction methodology, we downgraded the market status to an Uptrend Under Pressure on Monday as Nifty Bank breached its current support level of 48,300 with an elevation in distribution days. From now onward, the recent low, i.e., 47,898.35 is a key level to watch as we may shift the market status to a Downtrend, when the index breaches it.
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The index took support around its 21-DMA (i.e., 48,900) and resistance around the psychological level of 50,000 amid a volatile trading session. Moving ahead, 49,000 on the downside and 50,000 on the upside may serve as support and resistance, respectively. Additionally, a breakout of either side may lead this index in the same direction this week.
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Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before making any investment decisions.
