MARKET REPORT
August 26, 2013
The Markets had a positive session on Friday wherein it
continued with its up move and moved towards its important resistance levels
while ending the day with good gains. The Markets opened on a flat note and
soon traded negative to give the day’s low of 5377.80 in the early minutes of
the trade. The Markets traded negative in the opening trade but soon changed
its trajectory to come back into the green. The Markets traded flat to positive
in a capped range in the morning trade. Thereafter, it formed a rising channel
and remained so until the end of the session. It went on to give the day’s high
of 5478.80, rising almost 100-odd points from the day’s low. It hovered around
those levels and finally ended the day at 5471.75, posting a decent gain of
63.30 points or 1.17% while forming a higher top and higher bottom on the Daily
High Low Charts.
MARKET TREND FOR TODAY
Today, expect the Markets to open on a modestly positive
note and look for directions. The Markets are expected to open and trade
positive and continue with its pullback and attempt to reverse the trend, at
least in the initial session. The intraday trajectory would be important as the
global cues remain supportive. It would be important to see the behaviour of
the Markets vis-à-vis the resistance levels of 5500, the support which it broke
on its way down.
For today, the levels of 5500 and 5540 would act as
immediate resistance on the Daily Charts. The supports come in at 5445 and 5410
levels.
The lead indicators show no signs of any weakness.
The RSI—Relative Strength Index on the Daily Chart is 40.3816 and it shows no
bullish or bearish divergence or any kind of failure swings and is therefore
neutral. The Daily MACD continues to trade below its signal line. On the Weekly Charts, the RSI is 38.2001 and
it has reached its lowest value in last 14-days which is bearish. The Weekly
MACD too trades below its signal line.
However, on the Weekly Candles, A hanging man occurred (a hanging man has a very
long lower shadow and a small real body).
This pattern can be bullish or bearish, depending on the trend. If it occurs during an uptrend it is called a
hanging man line and signifies a reversal top. If it occurs during a downtrend (which
appears to be the case with NIFTY) it is called a bullish hammer.
On the derivative front, NIFTY August futures have shed nominal
2.63 lakh shares or 1.12% in Open Interest. However, this single month data
would now stand slightly irrelevant as the expiry week has begun and we are
seeing rollover beginning to take place.
Overall, from the reading of the Charts, its indicators and the
pattern analysis, we see the uptrend continuing and we see positive bias in the
Markets. However, it is also likely that the Markets resists a bit OR sees very
minor profit taking OR consolidates around the levels of 5500. This is because
this was the double bottom support that it broke on its way down and this
might, technically speaking, act as resistance.
All and all, as mentioned, the behaviour of the Markets vis-à-vis
the levels of 5500 would be important. There are chances of consolidation
around these levels. It is advised to start making fresh purchases only after
the Markets moves past these levels with conviction. Until the Markets moves
past this level, there will be little less directional bias, even with the bias
remaining certainly on the upside. Overall, while cautious outlook with
optimism is advised while continuing to protect current open positions.
Milan Vaishnav,
Consulting Technical Analyst,
+91-98250-16331
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