Monday, August 27, 2012

Daily Market Trend Guide -- Monday, August 27, 2012

MARKET TREND FOR TODAY                                                                  August 27, 2012
The Markets on Friday corrected on expected lines as it opened below its key levels of 5400 and remained so for the entire session. The Markets opened on a negative note and continued to correct, though it did so in a extremely range bound manner. The Markets gave their day’s low of 5371 in the mid afternoon trade. However, it recovered a bit during the rest of the session and finally ended the day at 5386.70, posting a modest cut of 28.65 points or 0.53%. The volumes remained around its average and the Markets have formed a lower top and lower bottom on the Daily High Low Charts.

Today, we might again see a flat opening in the Markets and the Markets are expected to again remain directionless and trade below its key levels in the initial trade. With no directional triggers on either side and with the Markets below its key levels of 5400, we are not to see any runaway rise in the Markets unless the Markets moves past those levels again.

For today, the levels of 5400 and 5440 shall continue to act as immediate resistance and the levels of 5365 and 5320 are immediate supports on the Charts.

The RSI—Relative Strength Index on the Daily Charts is 62.2344 and it is neutral as it shows no negative divergence or failure swings. The Daily MACD continues to trade above its signal line. On the Weekly Charts, A Long upper shadow has occurred and it is typically a bearish signal and indicates weakening of momentum at with this formation on the Charts. 

It is important to note that the levels of 5400-5410 are not only pattern resistance on the Daily Charts, but on Weekly Charts too, these levels are posing a similar pattern resistance.
Further to this, NIFTY futures have shed 5.50 lakh shares or 2.13% in open interest which increases the chances of the Markets remaining weaker and below 5400 in immediate sessions.

Having said this, the conclusion here is that since the Markets came  back below 5400 levels, these levels and its filters have remained immediate resistance for the Markets. Further, in event of no comprehensive breakout, the Markets shall have to move past these levels again for a comprehensive breakout but shall currently trade with moderately negative bias. Range bound movements and volatility shall remain and thus, highly selective approach is advised for today.

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


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