MARKET TREND FOR FRIDAY, JANUARY 27, 2017
Indian Equity Markets will open today after a day of holiday
on account of Republic day yesterday. In the Wednesday’s session, the benchmark NIFTY50
made a perfectly projected up move as it
not only tested 8550-mark but went on to end at 8602.75 posting a rubust uptick
of 126.95 points or 1.50%. While we open today, we will see our Markets
adjusting to an extremely buoyant global equity set up. Dow Jones moved past
20,000-mark for the first time and the European and Asian peers trade buoyant.
We can certainly expect yet another uptick in the Markets today and expect a
buoyant start. However, there are all chances that we see some profit taking
coming in from higher levels while we go ahead in the session as we now trade
in “overbought” zone.
For today, the levels 8635 and 8660 will act as immediate
resistance levels. Supports will come in at 8550 and 8525 levels.
The Relative Strength Index—RSI on the Daily Charts is
72.0822 and it has reached its highest value in last 14-days which is Bullish.
It does not show any bullish or bearish divergence vis-à-vis the price but it
now trades in “overbought” territory. The Daily MACD stays bullish while
trading above its signal line. On the Candles, a Rising Window occurred.
This is typically a gap wherein the day’s low is higher than the previous high
and it often indicates continuation of uptrend.
The NIFTY February futures saw addition in net open interest
indicating creation of fresh long positions in the NIFTY and across the board
as well.
If we look at pattern analysis, it presents a divergent
picture. On the Daily Charts, the NIFTY now trades extremely buoyant but at the
same time it trades in overbought territory and shows some chances of
correction from higher levels. On the Weekly Charts, the NIFTY has shown strong
tendencies to move ahead and eventually test much higher levels. Given this
divergent reading, it may happen that we might see some profit taking at higher
levels. Though we expect a buoyant opening today, some paring of gains at
higher levels cannot be ruled out. However, given the buoyant set up on the
Weekly Charts, such corrections may remain shallow.
Also important to note is that even if the Markets trade in
“overbought” territory, this will not be the only reason that can cause any
corrective activity. Markets do tend to remain overbought in buoyant
environments. However, the holistic reading of the Charts surely suggests that
we now need to shift our focus on protecting profits at higher levels. The possible
uptick on the US Dollar Index and spiking of US Bond Yields may exert some
pressure again on the Equities. So, overall, we advice to lay more emphasis on
booking and protecting profits at higher levels and adopt mildly cautious
outlook on the Markets.
Milan
Vaishnav, CMT
Technical Analyst
(Research Analyst, SEBI Reg. No. INH000003341)
Member:
Market Technicians Association, (MTA), USA
Canadian Society of Technical Analysts, (CSTA), CANADA
+91-98250-16331
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