Tuesday, March 20, 2012

Daily Market Trend Guide -- Tuesday, March 20, 2012

MARKET TREND FOR TODAY                                                      March 20, 2012
The short week began (Friday being a trading holiday) with the Markets continuing to slide on the third consecutive day as it once again ended the day with losses.  The Markets opened on a negative note and never really showed strength as it recovered to trade in positive for a very brief period in the morning trade. Thereafter, it formed a negative downward falling trajectory and went on to remain in this formation for the rest of the session. It went on to give the intraday low of 5238.55 after recovering a bit and ending the day at 5257.05, posting a net loss of 60.85 points or 1.14%. In the process, it has continued to form a lower top and lower bottom on the  Daily High Low Charts.
The Markets are expected to open on a flat note today and look for directions. The intraday trajectory would be critically important for the Markets and shall remain important enough to decide the trend for the day. The levels of 5325 and 5360 are immediate resistance on the charts and the levels of 5240 and 5161 are expected to act as immediate supports.
 
The RSI—Relative Strength Index on the Daily Chart is 44.9074 and it is neutral as it shows no negative divergence or failure swings. The Daily MACD continues to remain bearish as it trades below its signal line.
Having said this, it is important to note that the Markets are poised at a critical juncture. As evident from the Chart above, the Markets have made a lower top and has not held the 5400-5420 levels of support zone, as of now. On the other hand, yesterday’s close has taken support at its 50-DMA of 5241 levels. IF the Markets hold this support then it has immediate resistance as mentioned above and the levels of 5400-5420 shall act as immediate top. If the Markets g et weaker, the next immediate major support would be the 200-DMA of the Markets at 5161.

The overall volumes have been hovering around its average, and overall, the Markets have been consolidating and are expected to do so in coming sessions. The NIFTY and major stock futures have overall added open interest and some significant amount of shorts have been seen. The lower volumes have been a minor positive for the markets in times of consolidation.

All and all, the range bound movement in the Markets is expected to continue. With the NIFTY PCR of 1.06, even if there is weakness on the Charts, it is likely to be brief and the Markets may find important support in next 1% range. It is advised to refrain from any fresh shorts and any longs should be taken very selectively as stock specific action shall continue. Overall, some stability is expected and positive caution is advised for today.

Milan Vaishnav,
Consulting Technical Analyst,
+91-98250-16331


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