MARKET TREND FOR THURSDAY, JULY 21,
2016
The Markets have attempted to resume its up
move by moving towards upper end of its consolidation band yesterday as it
ended the day with modest gains. However, it has not yet shown any break-out
from that narrow consolidation zone and it continues to remain within that.
Today, we can expect the Markets to open on a flat note and continue to consolidate
with the levels of 8600 and 8625 continuing to act as immediate resistance
levels. The Markets are nearly overbought once again and any sharp up move will
make it overbought again.
Today, the levels of 8600 and 8625 will act
as immediate resistance levels for the Markets. The supports come in at 8515
and 8470 levels.
The RSI—Relative Strength Index on the
Daily Chart is 69.4113 and it does not show any failure swing. However, NIFTY
has formed a fresh 14-day high but RSI has not and this is Bearish Divergence.
The Daily MACD stays bullish as it continues to trade above its signal line.
On the derivative front, NIFTY July futures
have added yet another over 6.21 lakh shares or 2.71% in Open Interest. This makes
it very much evident that we have seen fresh long positions being initiated
once again in this segment.
Coming to pattern analysis, the Markets
have continued to show up move but it has remained within the narrow range in
which it has been consolidating. The Markets have been consolidating with the
levels of 8600-8610 acting as resistance on the upper side. With the Markets
tracking the rising trend line of the channel it has formed from February lows,
any fresh up moves or attempts to break out of the consolidation zone will see
the Markets testing its logical targets of 8630-8645 levels. However, it will
be overbought once again and it would be a while before we see a longer
sustainable rally even if the undercurrent remains buoyant.
Taking into account that the lead
indicators have shown very mild signs of weariness again, the Markets may show
up moves but will continue to remain vulnerable to sharp selling bouts as it
has been in the past. Before a fresh sustainable breakout is seen, we will
continue to see some good amount of volatility remaining ingrained in the
Markets. We continue to reiterate to avoid major shorts positions, preserve
cash and keep fresh purchases highly stock specific.
Milan
Vaishnav, CMT
Technical Analyst
Member: Market
Technicians Association, (MTA), USA
Member:
Association of Technical Market Analysts, (ATMA), INDIA
+91-98250-16331
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