Nifty 50 McClellan Oscillator Lowest Since March 2016
Nifty 50 McCllellan Oscillator had made a low of -88 on 12th February 2016 and after that, we had never seen those levels till date. Off late is was following a Channelled move down and then went sideways & finally ended up in a Gramophone pattern breakdown on 4th November 2016.
Currently, the Nifty 50 McClellan Oscillator is trading at -70, the lowest since March 2106. $NIFTY was in an up trending channel and that had broken down & all efforts to push within the channel have failed. Let us try to analyse probable scenario based on the chart below.
In the above chart, we can see that the $NIFTY broke down from the long-term channel and the McClellan Oscillator broke down from the Gramophone pattern, making a fresh low since March 2016. The breadth thrust is still holding up & not broken down completely. The advancing and declining issues are at extremes and there is a fair chance of a cool-off or pullback as visible at previous extremes.
The bottom trendline of the Gramophone pattern marked in magenta is the primary resistance going forward & the price need to advance above 8540-8560 with higher advancing issues to mark a reversal. Till then we can either see a sideways move or $NIFTY can drift down towards 8300 & 8190.
The sign of more pain would be if the McClellan Oscillator keeps going lower & breaks the February low. From the past behaviour, it is evident that when McClellan Oscillator goes below -80, most of the times it takes time to consolidate & make a higher low with divergence in $NIFTY price making a lower low before it gives a sharp trend reversal. With the US President Election results nearing, we would like to keep track of daily adv dec issues and the breadth thrust to give any clues of further breakdown or a reversal.
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