Sunday, February 1, 2015

Daily Market Trend Guide -- Monday, February 02, 2015

MARKET REPORT                                                                                  February 02, 2015
Markets traded precisely on dotted lines as analyzed in our previous editions of Daily Market Trend Guide as it finally saw much imminent correction from higher levels as the levels of 8985 held out as immediate top. The Markets saw a relatively quiet start and initially trade positive in the very early minutes of the trade while forming the day’s high of 8996.60. Since then, it transformed itself into falling trajectory and remained so throughout the session. It kept forming gradual lows during the day and in the second half of the session, the fall intensified a bit and the  Markets went on to form the day’s low of 8775.10, coming off more than 200-odd points from the high point of the day. Very minor recovery was observed but it finally settled the day at 8808.90, posting a net loss of 143.45 points or 1.60% while forming a slightly higher top but sharply lower bottom on the Daily Bar Charts.

We may again see a quiet to subdued opening in the Markets. However, it is important to note that speaking purely on technical terms; the Markets are very likely to consolidate and drift lower or at least remain in a trading range. The level of 8985 has continued to act as a immediate top for the Markets and this level would continue to act as key resistance levels in coming days.

The levels of 8985-8995 would continue to act as key resistance level for the Markets. The supports would come in at 8690 and 8640 levels.

The RSI—Relative Strength Index on the Daily Chart is 64.9121 and it has just moved below its “oversold” area which is bearish. It does not show any bullish or bearish divergence or failure swing. The Daily MACD continues to remain bullish trading above its signal line. On Weekly Charts, the Weekly RSI is 69.4750 and  like Daily Charts, this too has moved below from “oversold” area which is bearish. Also, this too remain neutral showing no bullish or bearish divergences or any failure swing. The Weekly MACD remains bullish trading above its signal line.

Coming to pattern analysis, the Markets have resisted to is quiet old rising trend line at 8985 levels. Though it did attempt to move past that level while making a high of 8996, it failed to do so. Therefore, this level of 8985 now continues to remain a immediate top for the Markets. It would be perfectly justified for the Markets to consolidate a bit more at this level. Even if it retraces near 8640 levels, it would be perfectly normal for the Markets to do so and there would be no structural breach on the Daily Charts. Until this happens, we will continue to see the Markets in a range bound consolidation.

While keeping the overall analysis on the same lines, we continue to reiterate to maintain adequate liquidity while keeping overall exposure moderate. While continuing to vigilantly protect profits at higher levels, we will also continue to see stock specific action. Therefore, while remaining highly selective, continuance of 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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