Wednesday, August 27, 2014

Daily Market Trend Guide -- Thursday, August 28, 2014

MARKET REPORT                                                                                              August 28, 2014
The last hour of the trade turned very volatile as the Markets swung nearly 60-odd points both ways after a mostly range bound session and ended the day once again on a modestly positive note. The Markets opened on a decently positive note but did not show any trend post opening as it maintained its opening gains for the most part of the session while trade in a sideways trajectory though it formed its intraday high of 7946.85 in the early minutes of the trade. It traded sideways after this for the most part of the session. In the late afternoon trade, the Markets saw a sharp downward movement as it pared all of its gains and formed its intraday low of 7916.55. It saw recovery coming in immediately after that and the Markets recovered all of its losses. It finally managed to end the day at 7936.05, posting a net gain of 31.30 points or 0.40% while forming a higher top and higher bottom on the Daily Bar Charts.


MARKET TREND FOR THURSDAY, AUGUST 28, 2014 

 Tomorrow, we enter the expiry day of the current August Derivative series. The session is undoubtedly remain dominated with rollover centric activity and quite good amount of volatility is likely to remain ingrained in it. Further, the trend formation would continue to pose resistance but maintenance of levels above of 7910-20 range would leave some room for up side for the Markets though it would be equally dangerous as well.

For tomorrow, the levels of 7965 and 7980 would act as resistance. The supports would come in at 7910 and 7825 levels. 

The RSI—Relative Strength Index on the Daily Chart is 64.9322 and it has reached its highest value in last 14-periods which is bullish. It does not show any bullish or bearish divergence as such. The Daily MACD continues to trade above its signal line.

On the derivative front heavy market wide and NIFTY rollovers continued. NIFTY August futures shed over 16.57 lakh shares or 15.77% in Open Interest whereas NIFTY September Series added over 42.71 lakh shares or 64.73% in Open Interest.

Going again to the pattern analysis, as mentioned often in our previous editions, the Markets continue to remain in broad range. There can be absolutely no doubt that such broad formation can be very early signs of the Markets topping out. It is evident by the volatility that is ingrained and also the small body of the trading sessions and narrowing market breadth also signals towards some exhaustion in the Markets. The Markets will continue to inch upwards so long as it stays above 7910-20 range but at the same time, very sharp reversal from any level cannot be ruled out.

Overall, with some immediate steam left, traders / investors can ride the Markets as it attempts to inch upwards so long as it stays above 7910-20 levels. But each such rise should be extremely cautiously dealt with as, just as mentioned earlier, sharp reversal from top cannot be ruled out. While maintaining extreme caution on the upside, controlled and moderate leverage is advised in the Markets.

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


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