Friday, December 23, 2016

Daily Market Trend Guide -- Friday, December 23, 2016

MARKET TREND FOR FRIDAY, DECEMBER 23, 2016
Indian Equities had a thoroughly disappointing session yesterday as it opened subdued, drifted lower, went on to breach the psychologically important 8000-mark and ended the day with a net loss of 1.02%. The Markets currently poise itself at a very precarious position. NIFTY has ended in the red for the seventh consecutive day losing nearly over 3%. With it now trading nearly 250-odd points below its 200-DMA, now is expected to hang on precariously to its immediate lows of 7928 levels. Today, we are once again expected to see a subdued opening but some improvement from lower levels cannot be ruled out. Volumes are expected to remain shallow.

For today, the levels of 8045 and 8090 will act as immediate resistance levels while supports are expected at 7950 and 7910 levels.

The RSI—Relative Strength Index on the Daily Chart is 35.4198 and it remains neutral as it shows no bullish or bearish divergence or any failure swings.RSI has reached its lowest value in last 14-days which is bearish. The Daily MACD has reported a negative crossover and it is now bearish as it trades below its signal line. On the Candles, a falling window is formed. It is a gap and it usually implies some weakness in the sessions to come.

On the derivative front, heavy unwinding / offloading continued as the NIFTY December futures have shed over 13.76 lakh shares or 9.64% in Open Interest.

Coming to pattern analysis, it is now very much evident that though NIFTY did form its immediate bottom at 7928 levels, it failed to confirm it. It failed to move past 200-DMA and sustain above that. This was necessary for the NIFTY to confirm the immediate bottom that it had formed. Now that NIFTY is drifting again, it is expected to find support at its previous lows of 7900-7930 zones. These levels will now remain critically important to watch out for.

As mentioned earlier, the NIFTY hangs in a precarious balance. On one hand, it is clearly indicated from the overall structure and the F&O data that some more temporary weakness is likely to persist. On the other hand, it has not breached its immediate important pattern supports in the range of 7900-7930 levels. Given this, and the fact that the volumes are shallow, we recommend refraining to created any major directional exposures until directional bias is established.

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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