Friday, August 22, 2014

Daily Market Trend Guide -- Friday, August 22, 2014

MARKET REPORT                                                                                              August 22, 2014
The Markets traded yesterday on expected lines as it witnessed ranged bound volatility and ended the day with nominal gains. The Markets opened on a quiet note and soon gathered some strength to inch upwards. It went on to form the day’s high of 7919.65 in the morning trade. However, after hovering around those levels for a while, it saw some minor profit taking coming in as the Markets pared all of those morning gains. It momentarily dipped into the red forming the day’s low of 7855.95 in the mid afternoon trade. It did manage to crawl back into the green after that but continued to trade within a capped range. The Markets finally ended the day at 7891.10, posting a minor gain of 15.80 points or 0.20% while forming a similar top and slightly lower bottom (almost a parallel bar) on the Daily Bar Charts.


MARKET TREND FOR TODAY

Today’s analysis would remain more or less on similar lines that of yesterday. We can expect the Markets to open on a flat and quiet note and look for directions. The Markets continue to resist to a trend line drawn within a broad formation and therefore the intraday trajectory and the volumes would play a major role in determining trend for today. Volumes remained a concern in the yesterday’s trade.

For today, the levels of 7920 and 7945 would act as resistance on the Daily Charts. The supports come in at 7810 and 7765 levels.

The RSI—Relative Strength Index on the Daily Charts is 62.5897 and it is neutral as it shows no bullish or bearish divergence or any failure swings. The Daily MACD remains bullish as it trades above its signal line. 

On the derivative front, NIFTY August futures have shed over 3.85 lakh shares or 2.56% in Open Interest. This implies some unwinding of long positions in the current derivative series.

Looking at the trend and pattern analysis, while remaining in the overall broad formation, the Markets have resisted to a trend line drawn within that. Further to that, for any up move to occur, volumes / participation would play a major role and this is what is seen on lower side since last couple of sessions. However, even with immediate or short term up move, the Markets would continue to remain in the major broad formation.

Overall, today’s strategy would remain more or less on similar lines. More emphasis should be laid on defensives while taking long positions or if not this then they should be taken ultra selectively. This is because the Markets show all sings of continuing with consolidation but stock specific out performance would continue. Overall, continuance of cautious optimism is advised for today.

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


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