MARKET TREND FOR FRIDAY, AUGUST 12, 2016
Last hour recovery in the Markets helped it to end the day
with modest gains but it continued to remain in corrective mode. Today as well,
we continue to keep our analysis on similar lines. Today, we can expect the Markets
to once again open on a mild to modestly positive note but overall, it will
continue to remain under consolidation. Though it has attempted to find a minor
bottom yesterday, any runaway up moves still cannot be expected.
For today, the levels of 8625 and 8675 will continue to act
as immediate resistance levels for the Markets. The supports come in at 8540
and 8505 levels.
The RSI—Relative Strength Index on the Daily Chart is
54.8391 and it remains neutral as it shows no bullish or bearish divergence or
any failure swings. The Daily MACD stays bearish as it trades below its signal
line. On the candles, though it is not at a Classical Hammer, a small
hammer-like formation raises some hope of a potential bottom formation. Though
it need confirmation by any means.
On the derivatives front, the NIFTY August futures have remained
nearly unchanged as it shed 57,300 or just 0.22% in Open Interest. The Open Interest
too remains unchanged.
Coming to pattern analysis, the Markets have fallen out on
the downside from the upward rising channel drawn from the February lows. As
mentioned often in our previous editions, this Channel was getting narrower
with each passing day and a sharp either side movement was expected. This
happened on the downside as the Markets were anyway showing signs of a fatigue.
This has made the levels of 8700-8715 an interim top for the Markets for the
immediate short term. No runaway moves will be expected until the Markets moves
past these levels. However, again as mentioned often in our previous editions, with
the overall inherent structure of the Markets remaining buoyant, these
corrections will be met with relatively limited downsides and some range bound consolidation.
Overall, keeping the above in view, we reiterate our
analysis to use all possible upsides to vigilantly protect profits at higher
levels while continuing to utilize all downsides to make fresh selective
purchases. However, given the fact that volatility will continue to remain
ingrained, major shorts should be avoided and higher proportion of liquidity
should be maintained while adopting a cautious outlook on the Markets given the
long weekend next week as Monday will remain a trading holiday on account of
Independence Day.
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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