Nifty Technical Outlook: Medium Term Upside Capped, The Time To Rebalance Is Now

The NIFTY formed an ominous "Doji Star" on the weekly charts last week - this is a tell-tale candlestick pattern that usually appears at or near the end of a broad medium-term trend. A Doji Star is forms when the opening and closing values for a given time-frame are almost exactly the same, signalling equal balance between the bulls and bears.

This could very well signal the near end of the positive swing that commenced at the end of March, and which saw the index rising more than 8% in the space of just two and a half months.

The Upper Bollinger Band also continued its downward slant, signalling that the upside is getting more and more limited as we move forward. Given the current position of the band, the immediate resistance seems to have moved down by a good 80 points over the past few weeks and appears to be placed at around 10,950.


Since timing the precise peak of a swing has a low probability of success, those who have been waiting patiently to exit non-performing equity funds or waiting for an upswing to rebalance/derisk their portfolios at an opportune time should not wait any further. Now is the time to do it - just make sure you spread your transactions over at least three tranches over the next couple of weeks.