Thursday, January 22, 2015

Daily Market Trend Guide -- Thursday, January 22, 2015

MARKET REPORT                                                                                  January 22, 2015
Markets had yet another day of up move and scaled their fresh lifetime highs once again and ended the day with modest gains. The Markets saw a flat to mildly positive opening and soon formed its intraday high of 8741.85 in the morning trade. However, thereafter, the Markets spent most of the time in a ranged and capped manner. Soon forming this high, the Markets saw equally sudden paring of gains as it dipped into negative for a brief period forming the day’s low of 8689.60. Markets recovered again after this and spent the rest of the entire session trading in a range bound manner with some amount of volatility ingrained in it. It finally settled the day at 8729.50, posting a modest gain of 33.90 points or 0.39% while continuing to form a higher top and higher bottom on the Daily Bar Charts.

Today, expect the Markets to see a modestly positive opening once again and might test its fresh highs again. The Markets may trade positive in the opening trade but at the same time some consolidation is likely at higher levels. The Markets are showing very mild signs of weariness and might witness some profit taking from higher levels even while keeping the original trend intact.

The levels of 8750 and 8785 would act as immediate resistance levels as the Markets continue to trade in uncharted territory. The supports would come in much lower at 8640 and 8610 levels.

The RSI—Relative Strength Index on the Daily Chart is 70.1118 and it has reached its highest value in last 14-periods which is bullish. It does not show any bullish or bearish divergence but now trades in “overbought” zone. The Daily MACD continues to remain bullish while trading above its signal line.

On the derivative front, the NIFTY January futures have continued to add modest open interest which shows some fresh amount of buying continued in the Markets.
Returning to pattern analysis, the Markets have successfully moved past its previous high and has attempted a breakout. The Markets are most likely to continue with its up move given the structure of the Charts but at the same time we cannot rule out some minor profit taking at higher levels. This may not result in any major decline but we can certainly see some amount of consolidation at higher levels.

Overall, the trend certainly remains intact. However, in the same breath, the Markets are showing very mild signs of weariness and this might result into some consolidation and mild profit taking at higher levels. Overall, selective purchases may be made but more emphasis should be laid on protecting profits on existing positions at higher levels. Overall, cautious optimism 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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