Wednesday, September 21, 2016

Daily Market Trend Guide -- Wednesday, September 21, 2016

MARKET TREND FOR WEDNESDAY, SEPTEMBER 21, 2016
Caution continued to weigh heavy on the domestic equity markets as the NIFTY remained under pressure and range bound on Tuesday while it ended the day with modest losses. Today as well, we continue to keep our analysis on similar lines. While the trade with see some reactions from the changes expected from the BoJ front, caution will prevail ahead of Federal Reserve which will decide on interest rate hike. Over 90% of the participants polled do not expect a hike. However, the session is likely to remain range bound and choppy.

For today, the levels of 8840 and 8895 will remain immediate resistance levels while supports will come in at 8730 and 8680 levels.

The RSI—Relative Strength Index on the Daily Chart is 53.9872 and it remains neutral showing no bullish or bearish divergence or any failure swings. The Daily MACD stays bearish trading below its signal line. An Engulfing Bearish Pattern has occurred on the Daily Charts. Since this has occurred during an pullback, it has a potential to halt the pullback briefly and cause the Markets to consolidate for some more time. However, this needs confirmation.

On the derivative front, the NIFTY September futures have shed over 1.23 lakh shares or 0.38% in Open Interest. This shows minor offloading / unwinding of long positions in the Markets.

Pattern analysis clearly depicts unsettled conviction of the participants on the Daily Charts. Even after receiving 100% throwback from the highs of 8968, the Markets have been indecisive while pulling back and during this process, the levels of 8730-8690 zone will continue to act as major pattern support. So long as the Markets trade above these levels, it will just consolidate. Any breach below this will bring in some weakness for the immediate short  term.

Though some caution is clearly visible on the Charts, the global Markets have been trading around its medium term pattern support. With the fact that no rate hike is expected, lot of such developments seem discounted for in the current levels and we might see the up move resuming in coming days. However, as of now, with caution very clearly visible on the Daily Charts, we reiterate our positive but cautious view on the Markets. Though sectoral and individual stock out-performance will continue choppiness cannot be ruled out.

Milan Vaishnav, CMT
Technical Analyst
(Research Analyst, SEBI Reg. No. INH000003341)
Member
Market Technicians Association, (MTA), USA
Canadian Society of Technical Analysts, (CSTA), CANADA
Association of Technical Market Analysts, (ATMA), INDIA

http://milan-vaishnav.blogspot.com


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