[Chart of The Week] Nifty Media Confirms Failed Breakdown

JC Parets
November 26, 2019

Over the last few weeks, we've talked about potential long-term bottoms in weaker sectors like Nifty PSU Banks, Pharma, among others.

Today we're taking a look at the Nifty Media Index as it confirms a failed breakdown that could serve as the catalyst for a new move higher.

Here's the Nifty Media Index breaking back above 1,850 which represents the 2013 highs that acted as former support/resistance. The break above this level confirms a failed breakdown and bullish momentum divergence, signaling that buyers have taken control and remain so as long as prices are above 1,850 on a closing basis.

Click on chart to enlarge view.

We took a look at the individual components within this sector to identify opportunity, but feel that a lot of them are still messy. Most look like they can head higher, but from a risk management perspective it's tough to get involved and the reward/risk doesn't justify taking the single stock risk.

With that being said, at the index level, there appears to be room for the Nifty Media sector to mean revert higher. As long as prices are above 1,850 on a closing basis we can look for mean reversion up towards 2,400 which represents the 38.2% retracement of its 2018-2019 decline.

This comes on the back of a failed breakdown and bullish divergence also being confirmed in the equally-weighted indexes of both the Media and PSU Bank sectors, providing further evidence that this rally attempt is broader-based than previous failed attempts.

If bulls are going to take control, this is their best shot to do so.

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Allstarcharts Team

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