Monday, August 29, 2016

Daily Market Trend Guide -- Monday, August 29, 2016

MARKET TREND FOR MONDAY, AUGUST 29, 2016
The Markets continued to remain in corrective mode on Friday as it ended the day with modest losses after coming off from its opening highs. Today, the Markets pose themselves at critically important levels. Markets are expected to open on a modestly negative note and this will see the Markets opening at around Friday’s low levels. These levels are minor pattern support on the Daily Charts and it would be important to see the behavior of the Markets vis-à-vis these levels. Therefore, it would be important to see the intraday trajectory that the Markets form post opening.

Today, the levels of 8625 and 8700 will act as immediate resistance levels for the Markets. The supports come in at 8540 and 8510 levels.

The RSI—Relative Strength Index on the Daily Chart is 48.7796 and it has reached its lowest value in last 14-days which is bearish. However, it does not show any bullish or bearish divergence. The Daily MACD continues to remain bearish as it trades below its signal line. 
On the Weekly Charts, the Weekly RSI is 63.9367 and this remains neutral as it shows no bullish or bearish divergence or any failure swings. The Weekly MACD is bullish as it trades above its signal line.

On the derivative front, the NIFTY September futures have added over 9.17 lakh shares or 3.48% in Open Interest. The NIFTY PCR stands at 1.02 as against 0.88.

Coming to pattern analysis, the Markets have been in upward rising channel drawn from lows of February and earlier this month, it halted its up move while it formed its intermediate top of 8728. Since these levels, the Markets have remained in consolidation and have been trading in a capped range all through this month. The movement has remained sideways and the correction has remained in form of limited decline and more of intermittent intraday selling bouts.  Around same levels earlier this month, the Markets also signaled a halt in the up move on the Weekly Charts as well as this up move has been interrupted by a Hanging Man  kind of Candle formation. Since then, over two weeks we have seen a sideways movement in the Markets and it has remained in a corrective / consolidation mode.

Today, with the modestly negative opening expected, the levels of 8540 will be important to watch out for. Any dip below this level will increase the Markets of testing its 50-DMA which rests at 8482 levels today. If the Markets defend the levels of 8540, we will continue to see them trading in a capped range. Volatility will continue to remain ingrained in the Markets and we will also see sectoral out performance taking place in selective spaces.


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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