Nifty-where a tired bull meets a stubborn bear

On Monday, Nifty witnessed a scintillating start above the 15,000 mark while soon after opening, it extended its move beyond the 15,100 mark. However, selling pressure emerged at higher levels, and thus, Nifty gave up the majority of its gains and finally ended the day with modest gains of 0.12 per cent at 14,956. The broader indices outperformed the frontline gauges with Nifty Mid-cap and Small-cap adding 0.30 per cent and 0.45 per cent, respectively.   

The price action of the day formed a small-bodied bear candle carrying upper shadow, which indicates selling pressure at higher levels. The index gave up nearly 150 points from the day’s high. Interestingly, Nifty opened with a gap for eight straight days in a row and recorded a negative close for the third consecutive day. Interestingly, in the last three trading sessions, all candles have a long upper shadow, indicating that the market participants are liquidating their positions at higher levels or a sell-on-rise scenario is on the cards!   

Nifty has closed below the short-term moving averages i.e., 5-EMA and 8-EMA. And, for the second straight day in a row, the index has sustained below the 20-DMA, which is not a good sign for the bulls. Going ahead, the low of Friday’s session (14,862) would be important to watch as this level would offer immediate support and breach of this support level would deepen the wounds of the bulls. The next support is placed in the region of 14,550-14,600.   

On the upside, the zone of 15,170-15,270 is likely to act as a resistance zone for the index and only a close above this zone would revive the confidence of the bulls.   

The 14-period RSI is still hovering around the 50-mark, while the daily MACD is bearish. We would advise the traders to avoid overleverage positions and be very selective while trading stocks.