Yes, like most markets, India's NIFTY is overbought on the daily frame but that alone is no reason to sell in isolation – overbought conditions can continue.

I would either wait for a pullback to get long or at least anticipate overhead resistance as the current swing is overextended. That's the easy answer, but it also seems to be the highest probability.

Glad to have you from New Delhi! Thanks!

There are two ways to look at this – according to Connie Brown, this might be a sign of a “Negative Reversal” meaning that when the next downswing begins, it will be more forceful than normal.

The other way is to see it as a 'hidden' sign of strength in that at the end of a bear market, we will see a sharp up-burst that will take price suddenly up (but not to a new high) which creates a new oscillator high (remember it's the difference in two moving averages) and you'll often see these 'bursts' at the beginning of new bull markets.

Second, your interpretation was correct but remember that we can see increased noise or random volatility into the close – I'll often not trade the close for this reason – I tend to focus on the morning. Most likely, it would have led to continuation any other time of the day except the close.

Bhupesh

The news momentum, for non-India readers, is that Govt. intends to partially sell off Govt companies shares to contain fiscal deficit, the possibility of Hilary Clinton now visiting India announcing Nuclear Power contracts coming Monday. all supported by the global equity surge. Results season continue mixed into next week.

On daily chart, though the RSI, STS, ADX are not overstretched but the divergence in 3/10 and the volume decline remains.

How do we read the charts for Monday, the same conundrum Dow watchers encounter this weekend ?
Sandew
New Delhi

i. If oscillator makes a new momentum high but price has not yet made a new high – what does that mean?

ii. If you see 1 min. chart of ABX on July 18 from 14.45 – 16.00 pm: Around 15.00 oscillator made NML indicating lower prices yet to come. Around 15.40, we get another NML but price now reverses. I was holding a short position in ABX and was expecting more lower prices and was stopped above 50 MA. Was I reading the oscillator incorrectly?

Thanks