Monday, February 6, 2017

Daily Market Trend Guide -- Friday, February 03, 2017

MARKET OUTLOOK FOR FRIDAY, FEBRUARY 03, 2017
It seems we have once again entered a period of positive consolidation as the benchmark NIFTY ended the day with a modest gain of 17.85 points or 0.20%. The Markets saw volatile movements on either side as a recovery was seen from the low point of the day and the last hour of the trade also saw rapid paring of gains. Today, we expect a quiet start but in the same breath, consolidation coupled with volatile movements on either side will also be seen. The NIFTY50 has fiercely consolidated at Close levels and it will continue to do so in immediate short term while also continuing to put underlying strong undercurrent on display.

For today, the levels of 8750 and 8785 will act as immediate resistance for the Markets. The supports will come in at 8660 and 8610 levels.

The Relative Strength Index – RSI on the Daily Chart is 72.6067 and it does not show any failure swing. It continues to trade in overbought territory. It also continues to portray Bearish Divergence on the Charts as the NIFTY has made a fresh 14-period high while RSI has not. The Daily MACD stays bullish while trading above its signal line. A Spinning Top on the Candles an indecisive session and the overbought nature of the Markets may temporarily halt the up move.

The NIFTY February series have further gone on to add over 7.98 lakh shares or 3.83% in Open Interest. This continues to show buoyant intent of the Markets.

The pattern analysis evidently shows that despite the buoyant undercurrent and strong structure, the lead indicators seem overstretched. We may see continued up moves but that will not be without any profit taking from higher levels. There are good amount of chances that the NIFTY once again oscillates in a defined range with an upward bias. The NIFTY tracking upward Bollinger Band while remaining overbought broadly suggest some imminent range bound correction.

Overall, with the lead indicators remaining overstretched and the NIFTY trading in overbought territory, we may not see any runaway rise in the immediate short term. Some amount of healthy correction would be welcome and even imminent. A minor corrective activity in form of a range bound oscillation cannot be ruled out. At the same time, it is equally important to note that the downsides will remain limited and the corrections will remain extremely shallow as the overall trend remains 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



+91-98250-16331 

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