MARKET TREND FOR TODAY
October 16, 2012
Markets continued to consolidate and spent the session in a
range bound but bit volatile trade as it managed to end the day with moderate
gains. The Markets opened negative and spent the first half of the trade with
capped losses and traded in a range as it gave its intraday low of 5651.05.
However, the Markets saw sharp short covering led rally in the second half as
the Markets traded in the positive territory while giving day’s high of
5693.70. However, unable to sustain those levels, the Markets pared some of its
gains again, but finally managed to end the day at 5687.25, posting a moderate
gain of 11.20 points or 0.20% while forming a lower top and lower bottom on the
Daily High Low Charts.
Today, again expect a modestly quiet opening in the Markets
and the Markets are expected to again trade in a range. However, F&O
statistics and the pattern analysis of the Markets suggests that the Markets
are likely to remain in correction mode for some more time. However, it would
still be important to watch intraday trajectory and the behaviour of the
Markets vis-à-vis its important support levels of 5630.
For today, the levels of 5630 shall continue to act as
important support level.
The RSI—Relative Strength Index on the Daily Chart is
58.6813 and it is neutral as it shows no negative divergence or failure swings.
The Daily MACD is bearish as it continues to trade below its signal line.
On the Candles, engulfing bullish pattern has
occurred. If this occurs during an uptrend, which is the case with NIFTY, it
may be last engulfing top which indicates a potential top formation on
the Charts. It may turn the Markets weak, but this is a potential formation, and needs confirmation
today.
Having said this, the NIFTY too has continued to shed Open
Interest as it has been doing in last couple of session.
All and all, there are bright chances, as per Pattern
Analysis , other indicators and formations and the F&O statistics that the
Markets may continue to remain in correction / consolidation mode for some more
time. The levels of 5630 would be major support level and any downward breach
will see further weakness creeping in. While avoiding aggressive positions,
continuance of cautious outlook is advised for today.
Milan Vaishnav,
Consulting Technical Analyst,
+91-98250-16331
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