Edelweiss Technical Reflection (ETR)
§ After three days of range trade and a tussle between bulls and bears, Nifty finally gave in the control to the bears. The horizontal range has given a breakdown below the 6115 with heavy volumes in the final hour. The momentum oscillator MACD is still trading with a sell signal, but above the zero line on the hourly chart. RSI has crossed below the moving average for the second time, indicating a sell signal. Overall market breadth turned in favor of declines at the close. Nifty stocks’ breadth was pathetic at 1:5. Nifty has made a ‘Bearish Engulfing’ pattern on the daily chart which will likely drag it lower in the coming sessions. It is also hanging on to the upward rising channel support, and if that is broken a likely test of deeper supports at 6070–5965 is expected in the short-term. On the other hand, a weekly close above 6144 would maintain the near-term upward bias on the index.
§ Realty, Metals and IT shares dragged the index in todays’ sharp down move. Pharma, Power and Oil & Gas stocks managed to outperform. Sharp one day reversal patterns have occurred on the Realty, Oil & Gas, Power, Midcap and Small-cap indices. Bullish Setups: CIPLA, BHEL, ESOIL, RCAPT. Bearish Setups: SESA, STLT, ICICIBC, JSTL, HCC.
§ Most global markets have pared the gains of the day and closed flat. Short-term momentum is positive on these indices that will support the prices. On the SPX 1150 is an important bullish pivot. Gold has given up nearly $30 after making a new high of $1360. An ‘outside bar’ pattern has formed on the daily chart, which will provide substantial challenge for the bulls. DXY has now retraced 78.6% of the rise from 74.20–88.80 with the momentum rolling bullish offering a short-term rally towards 78.50.
§ Interesting chart setups: KMB, BHEL, JSTL, STLT
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