MARKET TREND FOR
WEDNESDAY, APRIL 20, 2016
The Markets are poised
at a critical juncture today. We can fairly expect the Markets to open on a
flat to modestly negative note and look for directions. Though the Markets have
managed to end the day a notch above its 200-DMA, a clean break out still
awaits the Markets on the Weekly Charts. Further, the structure of the Daily
Chart clearly suggests good amount of possibility that the Markets will halt
its up move at least for the immediate short term. With the intraday trajectory
important, some amount of consolidation cannot be ruled out.
For today, the levels
of 7925 and 7960 will act as immediate resistance to the Markets. The supports
come in much lower at 7842 and 7770 levels.
The RSI—Relative Strength
Index on the Daily Chart is 67.7039 and it has reached its highest value in
last 14-days which is bullish. It does not show any bullish or bearish divergence
as such. The Daily MACD remains bullish as it trades above its signal line. On the
Candles, however, a Hanging Man has occurred. Since this has occurred
during an uptrend, it signifies as a reversal top. However, this needs
confirmation.
On the derivative
front, the NIFTY April futures have shed over 3.55 lakh shares or 2.19% in Open
Interest. This clearly shows some reduction in the long positions. The NIFTY
PCR stands at 1.07 as against 0.99.
Coming to pattern
analysis, the Markets, on the Daily Charts, have managed to surge beyond its
200-DMA level which is 7870 today. However, it stays within its filter as of
now. Further to this, on the Weekly Charts, the Markets have resisted to the
50-DMA which is 7927. Returning back to Daily Charts, the Markets have formed a
potentially bearish candle. A hanging man usually signifies a reversal
top and if the Markets moves past this level as well, then any uptrend would
remain vulnerable to sharp correction. To the most likelihood, this is likely
to halt the uptrend at least for the immediate short term. In case of any
corrective activity, the Markets have supports that are much lower around
7700-7750 zones.
All and all, though
the Markets have continued to display strength over last couple of days but
some amount of consolidation or a mild correction cannot be ruled out. Though the up moves have been fuelled by
global strength and liquidity, the current formations on the Charts have become
little bit risky. At this juncture, we would recommend not making further
purchases and keeping them very limited and selective. It is strongly recommended
to utilize any up moves in booking / protecting profits at higher levels.
Milan
Vaishnav,
Consulting Technical Analyst
Member: Market
Technicians Association, (MTA), USA
Member:
Association of Technical Market Analysts, (ATMA), INDIA
+91-98250-16331
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