Wednesday, September 10, 2014

Daily Market Trend Guide -- Thursday, September 11, 2014

MARKET REPORT                                                                         September 10, 2014
The Markets continued to correct on the second day in a row as it opened negative and ended the day with losses. On back of weak technical factors and also weak global markets, the Markets opened on a modestly negative note. Post negative opening the session witnessed a range bound negative trade in the morning session. In the second half, the Markets saw some more weakness creeping in as it kept gradually losing more ground. In the second half of the session, the Markets formed its intraday low of 8082.10. It did make a feeble attempt to recover from the lows but could not sustain that effort. The Markets finally ended the day at 8094.10, posting a net loss of 58.85 points or 0.72% while forming a lower top and lower bottom on the Daily Bar Charts.

MARKET TREND FOR THURSDAY, SEPTEMBER 11, 2014

Tomorrow’s opening would be extremely crucial for the Markets. We have observed that the Markets have shown a throwback after attempting to breakout. The Market is expected to open on a mildly negative note tomorrow. It would be extremely important for the Markets to trade above 8080-8090 levels. Any dip below this would take the Markets inside the broad trading range again and the breakout signal would become invalid.

The levels of 8135 and 8180 would act as immediate resistance. The levels of 8040 and 8005 are likely to act as supports.

The RSI—Relative Strength Index on the Daily Chart is 65.0487 and it has just crossed below its topping formation which is a bearish sign. However, it remains neutral as it shows no bullish or bearish divergence of any failure swings. The Daily MACD continues to trade above its signal line. 

On the derivative front, the NIFTY September futures have shed further over 6.90 lakh shares or 4.55% in Open Interest. This is clear indication that the long unwinding at higher levels has continued and there has been clear reduction in the long positions.

Going back to pattern analysis, the Markets had attempted a breakout as it move passed the levels of 8080-8010. However, after making of top around 8180, it has shown a throw back and has come again at a place from where it broke out. However, it would be important to see if the Markets reverses or else any downside from here would take the Markets once again within the broadening formation and the levels of 8180 would be come immediate top and the attempt to breakout would turn out to be a false signal or whipsaw.

Overall, the opening levels and the trading of the Markets above 8080-8100 would decide the trend for this particular session as well as for coming days. It is advised to continue with the policy of stringent profit protection at higher levels even if it comes at the cost of booking profits bit early. Very selective purchases may be made as sectoral out performance would be seen. But it is advised to keep purchases at moderate levels and continue to maintain caution for the day.

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


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