Friday, June 29, 2012

Daily Market Trend Guide -- Friday, June 29, 2012

MARKET TREND FOR TODAY                                                   June 29, 2012
The rollover centric trade and heavy caution weigh in the Markets today as it continued to fiercely consolidate as it ended the day again with very nominal gains after a 25-point volatile movement on the either side. After  opening on a quietly positive note the Markets moved in a capped range as it gave its day’s high of 5159.05. After moving in a capped range, the Markets suddenly gave up the gains as it was expected in our yesterday’s edition in form of a profit taking bout. It pared its gains, dipped into negative and gave its intraday low of 5125.30. It however saw sharp recovery from those lows. It however eased a bit and finally Closed at 5149.15, posting a nominal gain of 7.25 points or 0.14%. It formed a parallel bar on the Daily High Low Charts.

Today, as we enter into the new derivative series, today’s session would be important on many counts. The Markets are expected to open on a positive note, and this positive opening would again cause the Markets to open near its 100-DMA which has been acting as the upper range of the broad trading range the Markets has remained in last couple of sessions. The intraday trajectory, in this case, would remain critically important and the  behavior of the Markets in the range of 5190-5200 would be critically important.

The levels of 5190 and 5225 shall act as immediate resistance and the levels of 5095 and 5075 shall act as supports on the charts.

The lead indicators continue to remain comfortably in place. The RSI—Relative Strength Index on the Daily Chart is 58.2422 and it shows no negative or positive divergence or failure swings and is therefore neutral. The Daily MACD too remains bullish as it trades above the signal line.

The NIFTY and Marketwide rollovers have remained above average this time and the Open Interest in NIFTY has been at a 3-Month high and this is a clear indicator of a buoyant undercurrent, unless some external news flow plays a spoilsport. 

The Markets shall try and trade around the upper range of the broad trading range. However, the levels of 5194 will continue to act as a immediate top and resistance for the Markets. It would be the third attempt to move past that resistance. A fresh sustainable up move shall occur only after the Markets moves past the zone of 5195-5220 levels. So, the behavior of the Markets around these levels would be critically important.

All and all, even with the positive opening, the Markets would be in the broad range – though at the upper levels and the intraday trajectory at those levels and the volumes would be important. Like yesterday, the profit taking bouts ingrained with some amount of volatility is no ruled out. While avoiding shorts strictly the profit should be protected at higher levels and only selective longs should be taken before a clear breakout is achieved. Overall, positive caution is advised for today.

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


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