NSEI closes higher for the 10th day in a row
NIFTY 50 Index (NSEI) Technical Analysis Report for Oct 14, 2020 | by Techniquant Editorial Team
Moving higher for the 10th day in a row, NSEI ended Wednesday at 11971.05 gaining INR36.55 (0.31%). Today's close at 11971.05 marks the highest recorded closing price since February 20th. Trading up to INR95.25 lower after the open, the stock index managed to reverse during the session as bulls took control ending the day above its opening price. Closing within the prior day's range, prices missed to decisively move beyond the previous day's trading range.
Daily Candlestick Chart (NSEI as at Oct 14, 2020):
Wednesday's trading range has been INR175.05 (1.47%), that's slightly above the last trading month's daily average range of INR152.46. Things look different on the weekly timeframe, where the market's trading range of the last week has been way below the market's average weekly trading range. The longer-term, monthly volatility is currently slightly higher than usual for NSEI. Prices continued to consolidate within a tight trading range between 11791.15 and 12022.05 where it has been caught now for the whole last trading week.
In a volatile session, prices traded above the prior day's high as well as below the previous day's low, forming a bullish Outside Bar. The last time this happened on March 13th, NSEI actually lost -7.61% on the following trading day. Additionally, one bearish candlestick pattern matches today's price action, the Last Engulfing Top Pattern.
Prices are trading close to the key technical resistance level at 12022.05 (R1). After having been unable to move above 11988.20 in the prior session, NIFTY 50 ran into sellers again around the same price level today, failing to move higher than 11997.20.
The trend is clearly bullish, showing an intact uptrend in the short, medium and long-term.
Buying could speed up should prices move above the close-by swing high at 12022.05 where further buy stops might get triggered.
Among the eight market conditions that our pattern recognition engine identified today, the statistics for the Price Action based market condition "10 Consecutive Higher Closes" stand out. While it is usually interpreted as bullish, it has actually shown to be bearish for NIFTY 50. Out of 1 times, NSEI closed lower 100.00% of the time on the next trading day after the market condition occurred. The optimal exit for swing trading this condition on the short side has been after 10 trading days, showing a win rate of 100.00% with an average market move of -2.69%.