Thursday, October 18, 2012

Daily Market Trend Guide -- Thursday, October 18, 2012

MARKET TREND FOR TODAY                                                          October 18, 2012
The Markets had a relatively disappointing session as it opened strong on positive global cues, but technical took over later as it pared all of its gains to end the day with just minor gains.  The Markets opened on a positive note and made it intraday high of 5684.35 in the very early seconds of the trade. The Markets converted itself into falling trajectory after that and kept paring its opening gains gradually. It later dipped into negative and went on to give the day’s low of 5633.90 and finally ended the day at 5660.25, posting a minor gain of 12.25 points or 0.22%. It made a lower top and similar bottom on the Daily High Low charts.

Today’s analysis would remain more or less similar  to that of yesterday. The support levels of 5630 has held out again and we can see positive opening in the Markets today, but intraday trajectory would be crucial again like yesterday to determine the trend for the Markets. It would be critical to see that after opening positive, the Markets sustains the opening gains and stays afloat the levels of 5630.

For today, the levels of 5675 and 5710 shall act as immediate resistance levels and the levels of 5630 would act as immediate and important support.

The RSI—Relative Strength Index on the Daily Chart is 55.3894 and it is neutral as it shows no negative divergence or failure swings. The Daily MACD continues to trade below its signal line and is bearish. 

As the Markets have been doing in last couple of session, the NIFTY Futures have continued to shed Open Interest. It shed 2.88 lakh shares or 1.20% in Open Interest. This continues to signify that there has been long unwinding in the Markets.

Going by the above, it would be extremely necessary and critical for the Markets to see that it remains above the levels of 5630 in positive trajectory. Any dip below 5630 would induce further weakness in the Markets. However, the pattern analysis and F&O statistics show larger possibility of Markets either trading in a range, or getting bit weaker.

All and all, even with some intermittent  bouts, the Markets are not completely out of woods. Intermittent pullbacks might be seen, but sustainability would depend on if that is short covering or adding of fresh longs. While taking long positions very selectively, continuation of cautious approach is advised for today.

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



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