Tuesday, November 8, 2016

Daily Market Trend Guide -- Tuesday, November 08, 2016

MARKET TREND FOR TUESDAY, NOVEMBER 08, 2016
The Markets had a critically important session yesterday and though it came off from its intraday highs to end the day a notch below 8500-mark, it ended the day with modest gains. Today, once again, the zone of 8480-8500 will remain critically important level to watch out for. The behavior of the Markets vis-à-vis these levels will decide the trend in coming days. Moreover, caution is expected to weigh in heavily, especially in the second half today as we would brace ourselves to react to US election developments. Speaking purely on technical terms, it would be imperative for the NIFTY to trade above 8500-mark to avoid any further weakness from creeping in again.

For today, the levels of 8520 and 8575, which is the 100-DMA of the NIFTY will act as immediate resistance. The support will come in at 8480 and 8405 levels.

The RSI—Relative Strength Index on the Daily Chart is 39.2559 and it remains neutral as it shows no bullish or bearish divergence or any failure swings. The Daily MACD remains bearish while it trades below its signal line.

On the derivative front, the NIFTY November futures have shed over 11.67 lakh shares or 6.77% in Open Interest. This makes it very much evident that we have witnessed heavy short covering in the session yesterday. It would be important to see if this also gets replaced with fresh buying.

Coming to pattern analysis, the NIFTY had reported a downward breach from the falling channel that it had formed on Daily Charts from 8968 levels. However, yesterday’s modest gains have put NIFTY back on the verge of the return line which was a pattern support and the support which the NIFTY broke on the downside. Today, and in sessions to come, the levels of 8480-8500 levels will be important to watch out for. It would be imperative for the NIFTY to trade above this mark to avoid more weakness to creep in.

All and all, the behavior of the NIFTY vis-à-vis the 8480-8500 mark will be critical to watch out for. The lead indicators have shown positive inclinations by taking support on the trend lines and any slightest trigger will see the NIFTY attempting to sharply move up as it would cause short covering to continue from current levels as well. However, sustenance below 8475 will keep Nifty vulnerable to continuing weakness and intermittent volatile selling bouts from higher levels. We reiterate heavily cautious view on NIFTY and advise to keep positions and exposure at minimum levels until the NIFTY moves above 8500-mark comfortably and some directional bias is achieved after external events.

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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