Friday, June 12, 2015

Daily Market Trend Guide -- Friday, June 12, 2015

MARKET REPORT                                                                                         June 12, 2015
Markets had a terribly disappointing session as it gave away more than it had gained in the previous session to end the day with a deep cut. The Markets saw a stable opening on expected lines and formed its intraday high of 8163.05 in the early minutes of the trade. It remained in positive territory briefly in the morning trade. It was in the late morning trade and thereafter that bearish grip took hold of the Markets as it slowly pared all of its gains and dipped into the negative. It remained in the session pressure until the end of the session which also intensified at the later stage. The Markets went on to breach the psychological 8000-mark to form the day’s low of 7958.25. No major recovery was seen and it finally ended the day at the lowest levels since October last year at 7965.35, posting a net loss of 159.10 points or 1.96% while forming a higher top but lower bottom on the Daily Bar Charts.


MARKET TREND FOR FRIDAY, JUNE 12, 2015
Markets have ended the day yesterday at the lowest point of the day. Technically speaking, it is likely to open on a modestly positive note and trade positive in the initial trade. However, there appear faint chances as indicated by lead indicators and the F&O data that the Markets may not significantly move down from current levels. There are faint chances that the Markets may once again attempt a pullback while holding on to the current support levels.

The levels of 8000 and 8075 are immediate resistance for the Markets. The supports exists much lower at 7940 and 7875 levels.

The RSI—Relative Strength Index on the Daily Chart is 34.9029 and it does no show any failure swing. However, the NIFTY has made a fresh 14-day low while RSI has not. This is Bullish Divergence. Daily MACD remains bearish while it trades below its signal line. Further on the Candles, An engulfing bearish line occurred (where a black candle's real body completely contains the previous white candle's real body). If the engulfing bearish pattern occurs during a downtrend (which appears to be the case with NIFTY), it may be a last engulfing bottom which indicates a bullish reversal.  The test to see if this is the case is if the next candle closes above the bottom the current (black) candle's real body. Therefore, this needs confirmation.

On the derivative front, NIFTY June futures have added over 11.85 lakh shares or 7.67% in Open Interest. This very clearly suggests that significant short positions have been added. NIFTY PCR stands at 0.83.

Coming to pattern analysis, the Markets have breached its short term double bottom support of 8000. Primarily speaking, this is likely to induce some more weakness in the Markets. However, having said this, there are still faint hopes that the Markets may hold this levels at Close as they still trade within its filter. Further, the lead indicator also indicates a mild bullish divergence while may not allow the Markets to offer any significantly more downside. Candles also show a potential bottom formation. However, all these need confirmation.

All and all, the Markets certainly not out of the woods and might see some more temporary weakness, at least in the initial trade. However, factors like heavy addition in Open Interest indicating shorts, bullish divergence on the lead indicator, and signs of a potential bottom formation on the Candles, offer some hope of a technical pullback even if the Markets continue to remain in an overall downtrend. Cautious outlook should be continued for the day.

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

www.MyMoneyPlant.co.in
+91-98250-16331

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