Monday, June 27, 2016

Daily Market Trend Guide -- Monday, June 27, 2016

MARKET TREND FOR MONDAY, JUNE 27, 2016
The Markets witnessed tremendous amount of volatility on Friday following Brexit and swung nearly 400-odd points and ended with losses even after recovering some 150-odd points from the lows of the day. Today as well, we are likely to see a negative opening once again and the Markets will continue to adjust itself with this very important global development. As mentioned in our previous edition, the Markets did go on to test the 50-DMA and the Friday’s low has now become a reference point for the immediate short term.

For today, the levels of 8125 and 8165 are immediate resistance points for the Markets. The supports exist at 8010 and 7925 levels.

The RSI—Relative Strength Index on the Daily Chart is 48.5207 and it has reached its lowest level in last 14-days which is bearish. It does not show any bearish or bullish divergence. The 
Daily MACD is bearish as it continues to trade below its signal line.
On the derivative front, the NIFTY June futures have shed over 24.52 lakh shares or 15.43% in Open Interest.

Coming to pattern analysis, as we had mentioned in our Friday’s edition of Daily Market Trend Guide, the channel drawn from the lows that the Markets formed in February 2016 are now the immediate reference point for the Markets. The Markets have been trading while resisting to the upper line of this channel. The Friday’s trade would test the lower end and it happened exactly like that. Instead of taking support at the lower end, the Markets opened outside that rising channel and that line has not become immediate resistance for the Markets and the lows it formed are now the immediate support in the short term for the Markets. The levels of 50-DMA also coincides there and breach below that will induce some more weakness in the immediate short term.

Overall, lower opening is likely in the Markets once again but in the same breath, the Markets will also attempt to stabilize itself.  While expecting the levels of 50-DMA and the Friday’s low as immediate support, the Markets may attempt to form base and these levels will be important to watch out for as any breach below this will induce further weakness in the Markets. Going ahead, liquidity should be preserved while adopting a cautious outlook on the Markets.


Milan Vaishnav, CMT
Consulting Technical Analyst

Member: Market Technicians Association, (MTA), USA
Member: Association of Technical Market Analysts, (ATMA), INDIA

+91-98250-16331

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