Friday, January 17, 2014

Daily Market Trend Guide -- Friday, January 17, 2014

MARKET REPORT                                                                                        January 17, 2014
The Markets had a severe consolidation yesterday as it remained in very tight range and ended the day on a flat note after moving in either direction. The Markets opened on a modestly positive note and formed its intraday high of 6346.50 in the early minutes of the trade. After hovering around those levels, the Markets slipped and soon pared all of its gains to trade flat. After some sideward movement, the Markets slipped further to give the day’s low of 6299.85 in the afternoon trade. However, from there the Markets did attempt a recovery. It managed to recover all of its losses and trade briefly in the positive. No significant directional bias was witnessed as the Markets spent the rest of the session not moving in specific direction. It finally ended the day at 6318.90, posting a minimal loss of 2 points or 0.03% while forming a higher top and higher bottom on the Daily High Low Charts.


MARKET TREND FOR TODAY

Today, we are again likely to see a quiet opening in the Markets. The Markets have attempted a breakout and to give a sustainable upside, it will have to move past its minor double top formation of 6350 as we had mentioned yesterday. The intraday trajectory would be important after opening today and for any up side to sustain, the Markets will also have to see volumes coming in.

For today, the levels of 6350 and 6395 are immediate resistance levels on the Daily Charts. The supports exist at 6290 and 6255 levels.

The RSI—Relative Strength Index on the Daily Chart is 59.3719 and it continues to remain neutral as it shows no bullish or bearish divergence or any failure swings. The Daly MACD  too continues to remain bullish as it trades above its signal line.

On the derivative front, the NIFTY January futures has added over 8.21 lakh shares or 4.51% in Open Interest and this very clearly shows that there has been lot of addition of short positions in the Markets. In the last session, we have seen overall  premiums contracting as compared to the spot price and this clearly signifies creation of short positions in the system.

Overall, the structure on the Daily Charts remains stable. Going by the pattern analysis, the Markets would encounter resistance near its minor double top formation of 6350. For any up move or a fresh breakout the Markets will have move past those levels with conviction and volumes. However, given the F&O data, the formation is much supportive for a  up side breakout and the bias certainly continues to remain on the upside baring a consolidation of a day or two.

All and all, in the above narrated readings, it is advised to remain light on positions until a directional bias is confirmed. However, given the pattern analysis and the F&O data, shorts should strictly be avoided and any downside should be used for making very selective purchases. Overall, cautious optimism is advised for today.

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


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