Thursday, January 26, 2017

Daily Market Trend Guide -- Wednesday, January 25, 2017

MARKET TREND FOR WEDNESDAY, JANUARY 25, 2017
The Indian Equities continued to display strength perfectly on the analyzed lines as the benchmark NIFTY50 resisted to 100-DMA zone in the first half of the session and then broke out on the upside while ending the day with decent gains of 84.30 points or 1%. We expect the up move to continue and expect the Markets to test the 8530-8550 zones wherein it can meet another major pattern resistance as indicated in the Chart. Today, we enter the expiry of the current derivative series and we expect some amount of volatility to remain as well. The session will remain dominated with rollover centric activity and some intermittent bouts from higher levels cannot be ruled out given the indications thrown by the lead indicators.

For today, the levels of 8510 and 8535 will remain resistance levels for the Markets. The supports will come in at 8430 and 8390 levels.

The Relative Strength Index – RSI on the Daily Chart is 65.8237 and it does not show any failure swings. However, the NIFTY has set a fresh 14-period high while the RSI has not and this has resulted into Bearish Divergence on this lead indicator. The Daily MACD remains bullish while continuing to trade above its signal line. On Candles, a strong white candle that has occurred signals potential continuation of up move.

On the derivative front, heavy rollovers continued as the NIFTY January series shed over 46.98 lakh shares or 30.35% in Open Interest while February series added over 59.73 lakh shares or 89.20% in Open Interest. The up move has come with an increase in Open Interest which is a positive sign.

While having a look at pattern analysis, it becomes clear that the NIFTY has attempted to move out of the broad trading range that it had formed. This trading range had resistance levels of 8430-8460 zones which also consist the 100-DMA of the NIFTY. The NIFTY deliberated in the previous session around 100-DMA and then it moved up further. We can expect the up move to continue and there are chances that the NIFTY tests 8530-8550 levels in short term.

Having said this, the lead indicators show some weariness in the immediate short term. Given the Bearish divergence on the lead indicators, there are high chances that we see NIFTY encountering some profit taking at higher levels. Given the overall structure of the Charts read along with the lead indicators, we now advice to emphasize more on profit booking at higher levels. All up moves from now on should be utilized more to protect profits at higher levels.

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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