Monday, January 23, 2017

MARKET TREND FOR MONDAY, JANUARY 23, 2017

MARKET TREND FOR MONDAY, JANUARY 23, 2017
The Markets on Friday saw its first corrective move after couple of days of narrow consolidation as it ended the day with a net loss of 85.75 points or 1.02%. The move remained on expected lines as the NIFTY50 continues to consolidate in a defined range. For today, we expect a mildly negative to stable start to the Markets. The levels of 200-DMA which stands at 8314 which also converges with one of the major pattern support as evident from the Daily Charts will be the important level to watch for. So long as the NIFTY trades above 8290-8320 zones, there will not be any structural breach on the Charts. The intraday trajectory that the NIFTY forms will dominate the trend.

For today, the levels of 8390 and 8445 will remain immediate resistance levels for the Markets. The supports come in at 8290 and 8265 levels.

The Relative Strength Index – RSI on the Daily Chart is 57.1507 and it does not diverge with the price and it remains neutral. The Daily MACD continues to remain bullish while trading above its signal line. On the Candles, a black candle occurred. It has occurred after resisting multiple times to the 100-DMA and therefore establishes credibility of this resistance level.

On the derivative front, the NIFTY January series have shed 22.09 lakh shares or 10.94% while the February series added over 9.82 lakh shares or 34.12% resulting in net reduction in Open Interest.

The pattern analysis represents a clearer picture. The NIFTY retraced from the 8440-8465 zones are resisting there for multiple times. The 100-DMA also remains present in that area resistance. The Friday’s decline has established the temporary credibility of that area resistance. It can be safely interpreted that the until the NIFTY moves past 8460-8480 zones, there will be no significant up move. Until this happens we are all likely to see the NIFTY50 oscillating in a broad trading range with the levels of 8290-8320 zones acting as very important pattern support area. It would be critically important for the NIFTY to trade above this zone in order to avoid any more weakness from creeping in.

Overall, we enter the expiry week of the current derivative series, we will see volatility remaining ingrained in the Markets. Moreover, we have a truncated week with the expiry happening one day earlier due to a public holiday. We had also mentioned that though the structure on the Weekly Chart remains intact, there are some divergent signals on the Daily Charts which may force NIFTY50 to remain under ranged consolidation. However, there is no structural dent on any Daily or Weekly Charts. Given this fact that undercurrent remains intact, dips should be continued to be utilized to make stock specific purchases so long as NIFTY trades above its 200-DMA.

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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