Sunday, November 16, 2014

Daily Market Trend Guide -- Monday, November 17, 2014

MARKET REPORT                                                                           November 14, 2014
The Markets continued to consolidate for the 7th day in a row while it saw a spurt in the final hour of the trade on Friday while it finished the session with gains. The Markets opened on a modestly positive note but after opening positive saw itself dipping into the red while forming the day’s low of 8346.80. It moved back in the positive territory soon after that in the morning trade but remained in a capped 20-odd points range throughout the rest of the trading session. It once again pared its gains from higher levels in the late afternoon trade but saw a very sharp spurt in the last hour of the trade. It not only recouped its earlier gains but formed a fresh intraday high of 8400.65. It finally settled the day at 8389.90, posting a net gain of 32.05 points or 0.38% while forming a slightly lower top but higher bottom on the Daily Bar Charts.


MARKET TREND FOR MONDAY, NOVEMBER 17, 2014

Markets have been severely consolidating as very clearly evident from the Daily Chart and have been trading sideward displaying great amount of underlying strength. The Markets may again see a quiet opening again and it is likely to consolidate at higher levels and therefore the overall analysis would continue to remain on similar lines as the Markets continue to remain mildly overbought as well.

The levels of 8410 and 8445 would act as immediate resistance levels and the levels of 8270 and 8215 would continue appear as immediate supports.

The RSI—Relative Strength Index on the Daily Chart is 72.0093 and it does not show any failure swing. However, the NIFTY has formed a fresh 14-period high while RSI has not and this is Bearish Divergence. It also trades in “overbought” territory. The Daily MACD although continues to remain bullish trading above its signal line. On the Weekly Charts, the Weekly RSI is 71.5658. It also shows a Bearish Divergence as NIFTY has formed a fresh 14-Week high but Weekly RSI has not while trading in “overbought” territory as well. Weekly MACD remains bearish as it trades below its signal line.

On the derivative front, the NIFTY November futures have shed 2.52 lakh shares or 1.09% in Open Interest.

Going by the pattern analysis, though the Daily Charts shows a prolonged formation, the Weekly Charts show a very classical Broadening Formation. With the ever rising upper trend line on both Daily and Weekly Charts, the Markets are not giving a clear breakout on the upside. As we have mentioned in our previous editions of Daily Market Trend Guide, such broadening formations are least useful patterns in achieving breakout as the breakout levels keep rising every day with the rising upper trend line which clearly diverges with the lower demand line. Also, the fact that the Markets continue to remain “overbought” also poses technical chances of the Markets consolidating at higher levels.

All and all, due to the present technical structure of the Charts, though the undercurrent remains extremely bullish, the Markets may continue to consolidate at higher levels. Runaway rise may not be seen because of the technical reasons mentioned and we may see the Markets forming a fresh area pattern before it breaks out on the upside. Given this reading, it is advised to continue to make selective purchases while paying equal or even more attention to protecting profits at higher levels. Overall, positive caution is advised for the day.

Milan Vaishnav,
Consulting Technical Analyst,
Af. Member: Market Technicians Association (MTA), USA
Af. Member:
Association of Technical Market Analysts, INDIA

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