Nifty trend for Friday
Right at the beginning, it seemed like it’s going to be an interesting weekly expiry as, at the opening bell itself, Nifty marked an all-time high of 13,216.60.
However, the opening level turned out to be the high point of the day, and post that, the bulls lost their spark and the index started to trim their gains. At close, Nifty settled at 13,134 i.e. at its record closing high.
Unlike the usual weekly expiry day, the market today oscillated in a range of just 109 points, which is lower than the 10-day average. It was also the lowest in the last four days, which resulted in the formation of an NR4 pattern on the daily chart. The formation on the daily chart resembles a bearish belt hold pattern as the highest price of the day turned out to be the opening price of the day and the closing was near the day’s low. However, given the fact that the day’s range was too narrow and also the price did not breach its prior bar low, we don’t think this should have a bearish implication. In fact, this can be viewed just as a breather as Nifty has managed to maintain a higher-low formation. Further, the advance-decline ratio was tilted in the favour of advancers as 1,357 stock advanced as against 549 decliners.
On Thursday, on an intraday basis, the price moved above the high of the bearish engulfing pattern (November 25) and challenged the Doji pattern, which was formed on the weekly chart. However, the index was not able to sustain above the high of this pattern and thus, closed below that. This certainly means that there is a high probability of further consolidation.
The negative divergence pattern continued on the daily chart and on the 75-minutes chart, the RSI just popped up above the 60-mark but thereafter, for the whole day, it traded below the 60-mark. Also, with the listless action of the past several sessions, the daily MACD has shown a negative crossover. Meanwhile, on the 60-minutes chart, the Bollinger Bands have started to contract and resulted in the formation of NR4 pattern as well as the contraction of Bollinger Bands (both indicate volatility contraction), just before the big event i.e. RBI policy on Friday. This means that we could see volatility expansion on Friday as the phase of volatility contraction is followed by the expansion of volatility.
Hence, going ahead, the traders should keep a watch around the high and low of Thursday’s session. Hence, the level of 13,100 is likely to act as an immediate support level as a breach of this level could open gates for a further correction towards the 12,900 levels. Meanwhile, the 13,220 level should be watched on the higher side.