MARKET TREND FOR MONDAY, JANUARY 16, 2017
We had expected NIFTY50 to test its 100-DMA and also resist
around those levels in the Friday’s session. While trading very much on
analyzed lines, the NIFTY did test its 100-DMA level and then came off from its
opening highs to end the day with a minor loss of 6.85 points or 0.08%. The
Monday’s session is likely to see a quiet opening and we very much expect the
Markets to continue to consolidate at Close levels. The 8440-8460 zones will
now become critical to watch out for and they are likely to pose resistance in
the immediate short term. The consolidation is expected to remain range bound
with limited downsides.
For today, the levels of 8460 and 8495 will act as immediate
resistance levels while supports are expected to come in at 8355 and 8320
levels.
The Relative Strength Index – RSI on the Daily Chart is
66.0148 and it does not show any bullish or any bearish divergence or any
failure swings. The Daily MACD is bullish while trading above its signal line.
No significant formation is observed on Candles.
On the derivatives front, the NIFTY January futures have
shed over 7.29 lakh shares or 3.53% in Open Interest. This shedding of OI with
the NIFTY coming off its highs indicates that there are high chances that some
amount of profit taking has crept in and this may force the NIFTY to
consolidate for some time.
Pattern analysis also indicates some amount of likely
consolidation on the Daily Charts. After breaking out from the 200-DMA levels,
NIFY has gained some 100-odd points and has recovered some 500-odd points from
the recent lows formed near 7900-7920 zones. This pullback has of course
occurred with intermittent consolidation, but some amount of minor profit
taking at higher levels cannot be ruled out. For the NIFTY50 to resume its
upward move, it will have to move past and Close above 100-DMA which stands at
8441 today. Until this happens we will see some amount of range bound
consolidation happening in the immediate short term.
In the same breath, it is important to note that the Weekly
Charts remain relatively more buoyant. So, if we translate its effect on the
Daily Charts, it is likely that though consolidation might happen and the area
of 8440-8462 might act as immediate resistance levels, the downsides will
remain limited on Close basis. Some volatility is likely to remain ingrained in
the Markets and we may see NIFTY50 oscillating in a defined trading range. Any
intermittent bouts and profit taking should be utilized to pick quality stocks.
Individual stock specific approach is advised for the day.
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
No comments:
Post a Comment
Note: Only a member of this blog may post a comment.