Wednesday, January 4, 2017

Daily Market Trend Guide -- Wednesday, January 04, 2017

MARKET TREND FOR WEDNESDAY, JANUARY 04, 2017
Much as expected, the Indian Equities continued to consolidate on the Daily Charts and ended yet another day on a flat note ending with nominal gains of 12.75 points or 0.16%. The Markets continued to display inherent strength as it came off its intraday lows, while also resisted to its prescribed levels. Today, we once again expect a flat to positive start. At the same time, we still do not expect a runaway up move in the NIFTY and expect the consolidation to continue but with a positive bias. The level of 200-DMA which is 8268 today will remain the key level to watch out for. Until the NIFTY moves past this level, we will continue to see range bound consolidation in the Markets.

For today, the levels of 8220 and 8270 will act as immediate resistance levels for the Markets. The supports come in at 8150 and 8115 levels.

The RSI—Relative Strength Index on the Daily Chart is 54.1561 and it has reached its highest value in last 14-days which is bullish. It does not show any bullish or bearish divergence. The Daily MACD is bullish as it trades above its signal line. On the Candles, a spinning top has occurred. This indicates indecisiveness but at the same time, the overall pattern of the Charts exhibits some amount of healthy consolidation.

On the derivative front, the NIFTY January futures have added over 1.98 lakh shares or 1.17% in Open Interest.

If we have a look at pattern analysis, after forming a Double Bottom support in the zones of 7900-7920 levels, the NIFTY has formed a broad trading range with the levels of 8250-8275 zones acting as its upper pattern resistance. The zone of 8230-8270 also has 50-DMA and 200-DMA and both of these levels are likely to pose resistance at Close levels. Before we see any runaway rise, it would be critically important for the Markets to move past the 200-DMA. Until this happens, consolidation in a broad range will continue.

Overall, we should also note one important point that after a pullback of nearly 300-odd points, the NIFTY has not corrected at all at Close levels. While giving intraday swings, it has remained flat on Close levels. This is a clear sign of inherent strength in the Markets. Given the overall technical structure of the charts, reading the position and pattern of lead indicators, and taking some cues of F&O data, we can once again continue to fairly observe that though it may be a while before NIFTY gives a runaway rise, any consolidation will remain limited. Some consolidation might be there in form of intermittent downswings but inherent strength continues to remain intact.

Milan Vaishnav, CMT
Technical Analyst
(Research Analyst, SEBI Reg. No. INH000003341)
Member
Market Technicians Association, (MTA), USA
Canadian Society of Technical Analysts, (CSTA), CANADA



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