Market is undergoing correction for past four months, however recent rally from early March low is very impressive. Does this mean we are out of the woods? Are we on the verge of starting the next rally? Let's check if charts are providing any clues...
Nifty weekly chart appears to be stuck in a range:
- RSI is above 50 mark and breaking the trend line is encouraging
- MACD remains in downtrend but manages to stay above zero mark and we do not have MACD crossover yet!
Daily Nifty chart also suggesting that we are not out of the woods yet:
- RSI is above 50 mark and close to breaking the trend line
- MACD has moved above zero mark and close to breaking the trend line
- However, Nifty itself remains in a wide channel range and might experience range bound action
Nifty advance decline line is trying to form a base and break the down trend line which is encouraging.
No. of stocks above their respective 50day and 200day moving averages is increasing as per below chart. Some more work is needed but if this continues then market can sustain a bull rally.
Overall, charts are telling us that, market internals are improving but need some more work. Until then market may experience range bound action hence better to be cautious.
Market remains in correction mode for now.
Market remains in correction mode for now.