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Charts & Analysis

Tech Note: Nifty Poised for Further Fall

The Nifty has just crossed below its 20 and 50 Day Moving Average and has reversed 3% from recent highs. Additionally, after a decent run, the MACD has turned into a short-term bearish zone for the Nifty.

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There is an M-pattern, in bollinger band concepts. The idea is that a stock kisses the upper bollinger band, reverses, and goes back up to but this time, doesn’t touch the band boundary. The deal is to move back to the 20DMA and then further on towards the lower bollinger band. It isn’t a sure thing – and only usable in conjunction with other indications, though this time there’s the MACD as well.

Further, looking at the Stocks above 20 Day Moving Average – an Indicator I created – the pattern shows that the current fall may continue.

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At an oversold level, the red line goes to a deep negative level. It’s useful to go short when the strategy shows a turn.

With RBI policy on Tuesday and many important international data points this week, things will be very volatile. But the price pointers are that stocks will fall. Let’s see how it turns out.