🔥 Premium AI-powered Stock Picks from InvestingPro Now up to 50% OffCLAIM SALE

Nifty 50 Shows Sign of Weakness but Uptrend Remains Intact

Published 19-06-2024, 06:45 pm

While the broader market Nifty 50 index is consistently making newer highs, traders should start to get cautious. After making a record high of 23,664, the index closed the session 41.9 points lower at 23,516.

There are a couple of reasons why the current uptrend might take a U-turn soon. Firstly, in the last 7 sessions, there is only one candle that closed in the green, and that too with a negligible difference of less than 1 point. A red candle simply means that bears took control by the closing and pounded hard enough for the session to close lower than it opened. In almost all 7 sessions, the bears were seemingly taking control in the second half of the session.

SUMMER SALE: Unlock the power of InvestingPro for unparalleled stock analysis. Discover high-quality dividend stocks, gain insights into top investors' portfolios, and access our advanced intrinsic value calculations. Click here and subscribe now to get a discount of up to 74%, for just INR 182/month!

The second sign of a probable reversal is coming from a bearish divergence that is being made on the daily time frame. The RSI (daily, 14) is indicating a slowdown in momentum with a divergence with respect to the Nifty 50 price. Divergence is a very strong reversal indicator and should not be ignored.

Now the bigger question is should traders initiate short positions? Well, the broader trend is still bullish without a doubt. Any index making a new high cannot be termed as bearish. However, it is time to get cautious with long positions by tightening the stop losses to protect most of the profits.

It is difficult to estimate the correct support level as there aren’t any nearby. The major support is present at around 21,700 which is too far to be considered at the current price. The sharp recovery from the low of the election result date faced no hurdle on the chart and therefore on the way down, it’s difficult to find any support.

However, 23,200 can be taken as a reference point to start tightening stop loss orders. A noticeable fall can be looked upon as a good buying opportunity due to the established broader uptrend.

InvestingPro is now available at a mouth-watering discount of up to 74%, for just INR 182/month. Click here to make the most of this SUMMER SALE!

Also Read: The Power of High-Quality Dividend Stocks with a "Screener"

X (formerly, Twitter) - Aayush Khanna

Latest comments

Loading next article…
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.