Tuesday, September 16, 2014

Daily Market Trend Guide -- Wednesday, September 17, 2014

MARKET REPORT                                                                                September 16, 2014
The Markets traded precisely on expected lines as it saw a serious correction setting in and ended the day with deep slice. Following weak technicals, the Markets opened on a negative note and traded with capped losses in the first half of the trade. However, after the morning session, the Markets saw some selling pressure coming in. This pressure got intensified in the second half of the session as the Markets rapidly lost ground. It went on to form the day’s low of 7925.15 towards the end of the session. Such selling pressure persisted and the Markets showed no signs of recovery at all at any point of time. The Markets, while showing no signs of recovery, ended the day at 7932.90, with a deep cut of 109.10 points or 1.36% while forming a sharply lower top and lower bottom on the Daily Bar Charts.

MARKET TREND FOR WEDNESDAY, SEPTEMBER 17, 2014

The failure of the breakout from the rising trend upper trend line has been completely validated. Technically speaking, the Markets are likely to open on a weaker note and have bright chances to continue with its downward trajectory. If such trend persists, there are chances that the its goes on to test the 50-dma levels. 

The levels of 8040 and 8190 would act as immediate resistance whereas the levels of 7860 and 7815 would act as support.

The RSI—Relative Strength Index on the Daily Chart is 47.8778. Though it does not show any bullish or bearish divergence, it has reached its lowest value in last 14-days which is bearish. The Daily MACD confirms it negative crossover and is bearish while it trades below its signal line.

On the derivative front, the NIFTY September further have continued to shed 5.29 lakh shares or 3.93% in Open Interest. This makes one thing very evident that the decline in Markets is direct result of unwinding of positions and pure selling.

Going by the pattern analysis, it is very much evident that the broadening formation that we have been mentioned over last couple of occasion has persisted and the Markets have failed to break out of that. The attempt to breakout has proved to be a false signal or a whipsaw and the Markets are back inside that broadening formation with a negative bias.

All and all, we continue to reiterate to exercise caution in the Markets. Even if the Markets see a minor pullback, it is likely to remain very short lived as the bias certainly remains on the downside. Any further weakness would have the Markets test its 50-DMA levels. Even if the Markets consolidate a bit the chances of it continuing with the downward trend is likely for the immediate short term. Overall, caution is advised in the Markets.

Milan Vaishnav,
Consulting Technical Analyst,
+91-98250-16331


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