Monday, November 28, 2016

Daily Market Trend Guide -- Monday, November 28, 2016

MARKET TREND FOR MONDAY, NOVEMBER 28, 2016
The NIFTY had a session with decent gains on Friday as it showed sustained wave of steady short covering while it ended near the high point of the day while temporarily marking an immediate bottom on the Daily Charts. Given the bottom to get confirmed, the levels of 7975-8010 will be critical pattern support to watch out for. Today, we might see a stable opening and NIFTY might show some positive bias to continue with its up move but its behavior vis-à-vis the levels of 200-DMA which is 8150 will be crucial to watch and is likely to act as resistance at Close levels. The NIFTY is still not completely out of the woods and its continuation of a pullback remains with certain caveats to watch for.

For today, the levels of 8150 and 8185 will act as immediate resistance levels. The supports come in at 8045 and 7980 levels.

The RSI—Relative Strength Index on the Daily Chart is 39.1721 and it has just crossed above 30 from a bottoming formation which is bullish. Otherwise it remains neutral as it shows no bullish or bearish divergence or any failure swings. The Daily MACD still remains bearish while trading below its signal line.

On the derivative front, the NIFTY December futures have shed over 8.67 lakh shares or 5.78% in Open Interest. This makes it very much evident that the up move that we saw on Friday has been purely on account of short covering. It is necessary that this gets replaced with fresh buying in order to further fuel the pullback.

Coming to pattern analysis, the NIFTY, at closing levels, has formed an intermediate bottom at 7929 levels. It has formed a higher low at Close at 7965 and has moved on from there. If the current pullback continues, the immediate levels that we should look at would be 200-DMA which is 8150 today. It is important to note that even if we continue with the pullback, we would still remain in the current downtrend and reversal yet to get confirmed.

Overall, the coming days will remain interesting to watch for. The reason being, the NIFTY has shown a strong tendency to pullback but on the other hand, this has happened on account of heavy short covering. It would be important to see if this gets replaced with fresh buying otherwise, NIFTY will once again remain vulnerable to selling at higher levels. The moving past and sustaining above the 200-DMA will be crucial for the  pullback to last and move towards confirmation on an immediate bottom.


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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