Wednesday, January 28, 2015

Daily Market Trend Guide -- Thursday, January 29, 2015

MARKET REPORT                                                                                  January 29, 2015
The Markets remained utterly volatile on Wednesday as it resisted precisely at the upper rising trend line and ended the day flat after wild swings. The Markets saw a quiet opening on expected lines and traded into negative in the morning trade, though with capped losses. However, later in the day, the Markets saw a sharp up move while it gathered strength. It went on to post a fresh lifetime high of 8985.05 in the mid session. However, at this time,  selling pressure and profit taking at higher levels weighed in as mentioned in our previous edition of Daily Market Trend Guide. This saw the Markets paring all of its gains in the second half of the session. It further went on to dip into negative to form the day’s low of 8874.05, losing over 100-odd points from the high point of the day. It finally settled the day flat at 8914.30, posting a negligible gain of 3.80 points or 0.04% while continuing to form a higher top and higher bottom on the Daily Bar Charts.


We can expect the Markets to see a stable and quiet opening but at the same time, it becomes very important to note that though the Markets have demonstrated good amount of strength by a flat close, it has potentially formed a immediate top for itself at 8985 levels. Even if the undercurrent which remains certainly intact, some amount of ranged consolidation coupled with mild profit taking cannot be ruled out. Further, we enter the expiry day of the current derivative series and therefore the session would continue to remain dominated with rollovers.

The levels of 8985 would now act as immediate resistance and the supports would come in at 8820 and 8750 levels on the lower side.

The RSI—Relative Strength Index on the Daily Chart is 75.7446 and it has reached its highest value in last 14-days which is bullish. However, it now clearly trades in “overbought” zone and shows no bullish or bearish divergence. The Daily MACD remains bullish trading above its signal line.

On the derivative front, rollovers continued as NIFTY February series added over 84.04 lakh shares or 69.91% in Open Interest.

Taking a cue from pattern analysis, as mentioned in our yesterday’s edition of Daily Market Trend Guide, the Markets have now resisted precisely at the upper rising trend line as evident on the Daily Charts. Having said this, even if the sentiment remains buoyant, some amount of consolidation or mild profit taking from higher levels continue to remain imminent. Also, the levels of 8985 would now act as immediate top for the Markets.

Overall, given the technical structure of the Charts, with the Markets resisting precisely at the upper rising trend line and further coupled with the fact that it trades “overbought”, it is very likely to see retracements with each up move. Though there may not be any significant correction, but this range bound consolidation will certainly have high degree of volatility ingrained in it. Under such scenario, we continue to reiterate very vigilant protection of profits at higher levels.

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

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