Daily Market Trend Guide -- Tuesday, August 18, 2015

MARKET REPORT                                                                                      August 18, 2015

The Markets witnessed a very volatile session yesterday and also tested its  200-DMA as expected in our yesterday’s edition of Daily Market Trend Guide while it ended the day with modest losses. The Markets saw a relatively quiet and positive opening but in the morning trade it saw a very sharp vertical paring of gains. Post opening, and after forming the day’s high of 8530.60 in the very early minutes of the trade, the Markets came off nearly 100-odd points in the morning trade to form the day’s low of 8428.05. While forming the day’s high and low in the morning trade, the Markets spent the entire session trying to make up with these losses. The first half of the session saw substantial recovery of the gains as the Markets recouped most of its losses. However, it was in the second half when the Markets came off once again. It finally ended the day at 8477.30, posting a net modest loss of 41.25 points or 0.48% while forming a similar top but higher bottom on the Daily Bar Charts.

MARKET TREND FOR TUESDAY, AUGUST 18, 2015

Today’s market analysis continues to remain more or less on similar lines that of yesterday. We can expect the Markets to open on a modestly positive note and once again, just like yesterday, the levels of 200-DMA will continue to act as crucial support for the Markets. Markets will have to maintain itself above the 200-DMA levels in order to prevent any weakness from creeping in again. Also, the pattern changes on the Daily Charts are showing chances of inherent buoyancy getting built up once again.

For today, the levels of 8530 and 8575 will act as immediate resistance levels for the Markets. The supports come in at 8457 and 8405 levels.

The RSI—Relative Strength Index on the Daily Chart is 50.7270 and it remains neutral showing no bullish or bearish divergence or any failure swings. The Daily MACD remains bearish while trading below its signal line.

On the derivative front, NIFTY August futures have shed over 5.60 lakh shares or 3.72% in Open Interest. This very clearly makes visible that unwinding of positions continued in the futures segment. It would be necessary to see if fresh longs are initiated at these levels.

Coming to pattern analysis, as mentioned often in our previous editions of Daily Market Trend Guide, the Markets have, as of now, survived a scare from a potentially bearish Head and Shoulders formation on the Daily Charts. We had mentioned that this is little vague and not so classical formation and the Markets took support at its DMAs and bounced back. The up move that we saw on Friday, 14^th, bought the Markets back into the trading range. Also, the 50-DMA has reported a positive crossover as it has crossed the 100-DMA from below. This indicates chances of upward momentum returning to the Markets in the immediate short term.

Overall, from the pattern analysis and the overall structure of the Charts, we can rely that the Markets have held on to its 200-DMA and 100-DMA as support at Close levels as of now. So long as the Markets maintain itself above these two DMAs, we will see it oscillating in a given range with a upward bias. Weakness will creep in only in event of the Markets breaching these levels. Overall, continuation of cautious approach with modest exposures in advised for today.

Milan Vaishnav,
Consulting Technical Analyst

Af. Member: Market Technicians Association, (MTA), USA
Af. Member: Association of Technical Market Analysts, (ATMA), INDIA
www.EquityResearch.asia
http://milan-vaishnav.blogspot.com

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