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Stocks Remain in the Broadening Formation; Suggesting a Breather

Stocks Remain in the Broadening Formation, Suggesting a Breather

MUMBAI, India – Friday was a day of major consolidation in the market, and stocks were seen trading in a limited and defined scale before ending the last day of the trading week mostly flat.

On Friday, the Nifty index started early in the session with lower gains from its previous close, then crawled into a more optimistic zone as the day progressed. The stock market continued to extend its gains from the previous trading session but mostly dropped those gains during the late morning session. Afterward, Nifty was seen going up and down, heading nowhere but around its previous close.

Friday was a trendless session for Nifty, which settled with a flat as the market closed, recording a negligible 0.03% decline, losing around 3.15 points for the day.

Nifty remained trading in the broadening formation and was seen drifting around the superior trend line. The pattern’s upper trend line is a rising one, which is blocking any sustainable rally from the stock’s current level.

Still, the main concern in the market at the moment is the lack of internal backing. Nifty’s performance in the coming days, especially against the 12,400 marks, is a major indicator in the market, whether there will be a significant directional up movement that will happen.

Meanwhile, for the start of the next trading week on Monday, the market is expected to have the same subdued start. The major overhead resistance will remain between the 12,385 and the 12,415 levels, while the 12,320 and the 12,275 marks will act as strong supports. In any case that there will be a corrective move, the trading range in the market is expected to widen even further.

The RSI (Relative Strength Index) remains at 60.79 points based on the daily chart, which suggests a neutral standing and without any deviation on the price within 14 days. However, after the 14 days, the RSI is looking towards a pattern formation that marks some of its lower lows, suggesting a bearish difference in price. Meanwhile, the daily MACD is still bullish as it remains trading over the signal line.

Aside from the black body seen in the pattern, there are no significant pattern formations observed.

Further, based on the pattern analysis, it is confirmed that Nifty is trading within a broadening pattern and stays trading around the upper trend-line. But giving its rising trend, Nifty is yet to reach any significant breakout.

With the lack of any apparent rally, the technical setup points at the moment to better sessions for the market is taking a breather. This breather in the market can either come as a slight corrective move or a continuation for the market trading in a capped and a well-defined range.

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