Sunday, February 19, 2017

Daily Market Trend Guide -- Tuesday, February 14, 2014

MARKET TREND FOR TUESDAY, FEBRUARY 14, 2017
The Markets ended fifth day in a row under fierce consolidation while it ended with nominal gains of 11.50 points or 0.13% post seeing a remarkable recovery from the lows of the Day. The NIFTY50 is witnessing strong consolidation on Close basis with flat endings while oscillating in a broad range on intraday basis. While this indicates very strong undercurrent, it has also established 8820-8830 zones as its immediate very short term resistance. With each passing day under consolidation, Markets are increasing its chances of a sharp move on both side and any movement past 8820-8830 zones will see some more up move despite the fact that the Markets continue to trade in overbought trajectory.

For today, the levels of 8830 and 8900 will continue to act as major immediate resistance levels while supports come in at 8730 and 8675 levels.

The RSI—Relative Strength Index on the Daily Chart is 73.3871 and it does not show any failure swing. It continues to trade in “overbought” terrain and also reports a Bearish Divergence as the NIFTY has set a fresh 14-period high while RSI has not. The Daily MACD is still bullish while trading above its signal line but as mentioned in our previous notes as well, it is moving towards reporting a negative crossover post flattening its trajectory. On the Candles, a long lower shadow occurred. This formation resembles a hanging man baring the fact that it has some upper shadow as well. Such formations often cause the Markets to consolidate while halting its up move. Such and similar formations have occurred couple of times over past five sessions and has caused the Markets to undergo strong consolidation after pausing the up move.

The NIFTY February futures have added over 6.32 lakh shares or 2.92% in Open Interest. This signifies buoyant undercurrent in the Markets.

The pattern analysis show quite distinctive and classical consolidation on the Daily Charts. 
On the Closing basis, the Markets have remained nearly flat in last five days by posting nominal gains or losses and remaining more or less flat. While intraday, the sessions have remained quite volatile in a broad range as it saw NIFTY oscillating on either side. Such behavior often signifies strong undercurrent in the Markets and after spending some time under such congestion, Markets usually makes and upward move.

Overall, if the NIFTY moves past 8820-8830 zone, it may see some more up move towards 8900-mark despite the fact that it trades overbought. Strong Markets tend to get overbought and remain overbought for some time. However, the behavior of the Markets vis-à-vis the levels of 8820-8830 zones and the intraday trajectory that it forms during the day will be critical to watch out for. The strong global equity set up is likely to aid the attempt of our Markets to move up. However, given the overbought nature of the Markets, fresh purchases may be made but also guarded equally vigilantly 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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