Nifty’s NR7 Bar Alert: Key Levels to Monitor this Friday Amidst Lowest Range in 7 Days

After opening in positive terrain, the Nifty within no time logged a fresh all-time high on Thursday of 20,167.65. However, after the initial hour, the index traded mostly in a stipulated range and ended the day with modest gains of 33 points or 0.16%. On the daily chart the index formed a small-bodied candle with wicks on both sides, which is an indecisive pattern. Moreover, Nifty traded within a range of 124 points throughout the day as a result it led to the formation of the NR7 bar. NR7 bar means narrow bar 7, it is a bar that has a smaller range than the six bars before it. Formation of the indecisive bar and NR7 exhibits exhaustion. 

The index has overextended the rally. It opened above Tuesday’s high, but by the end of the day, it was back in the range. The Bollinger bands further expanded, and the Nifty closed at the upper band. Since September 1, the index has not closed below the previous day’s low. As long as it sustains above the previous day’s low, there is no opportunity to short the index. The RSI has flattened above the 70 zone, while the MACD histogram is also flat. If the Nifty closes negative on Friday, we can assume that today’s high of 20,167.65 is the short-term high.  

On the downside, the immediate support is 19,944, which is Wednesday’s low. Below this level, profit booking may be intensified. The index failed to close above the prior bar high on an hourly chart. As the last hour short covering on weekly expiry, the index gained by 68 points and there is no divergence found in any of the indicators. Friday’s closing is crucial for the direction as the retesting of the breakout is normal. But closing below the 19,944 is negative. As the index is showing signs of overextension and exhaustion, it is better to avoid fresh long positions. Keep booking partial profits in the index. If the index trades above the 20,110, continue the long positions. Stay vigilant on both sides. 

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.