The iShares MSCI India UCITS ETF opened with a negative gap today and continued to trade south during the European session. Overall, on the 1-hour chart, the ETF continues to print lower highs and lower lows below a downside resistance line drawn from the high of January 21st, while on the 27th, if fell below the key support (now turned into resistance) zone of 6.306, thereby completing a “double top” formation. All these technical signs paint a negative short-term picture in our view.
Today, the price fell below yesterday’s low of 6.185, a move that confirmed a forthcoming lower low and which may have opened the way towards the peak of December 23rd, at 6.065. If that barrier is not strong enough to halt the slide, then its break may carry larger bearish implications, perhaps setting the stage for declines towards the inside swing high of December 21st, at 5.885.
Taking a look at our short-term oscillators, we see that the RSI rebounded from fractionally above its 30 line, while the MACD, although below both its zero and trigger lines, shows signs of bottoming as well. Both indicators detect slowing downside speed, suggesting that a small rebound may be looming before the next negative leg, perhaps for the price to test the aforementioned downside resistance line.
Now, in order to abandon the bearish case, we would like to see a strong rebound back above 6.306. This could cancel the “double top” and would also take the ETF back above the downside resistance line. The bulls may initially target the high of January 26th, at 6.378, the break of which may trigger extensions towards the 6.445 barrier, marked by the inside swing low of January 22nd. If that zone is not able to stop the advance either, then we may see the bulls aiming for the peak of that day, at around 6.515.
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