Wednesday, April 6, 2016

Daily Market Trend Guide -- Wednesday, April 06, 2016

MARKET REPORT                                                                               April 06, 2016
The Markets finally gave up its attempts of moving past 7750 levels and these levels continued to remain sacrosanct. Yesterday, a correction finally set in and the Markets ended the day yesterday with a very deep cut. The Markets saw a negative opening and traded with capped losses in the initial trade. Thereafter, the corrective activity intensified and the Markets remained in downward sloping trajectory for the rest of the entire session. The weakness intensified after the Markets reacted to the RBI’s decision to cut Repo Rate by 25 bps and raising Reverse Repo Rate by 25 bps. The Markets went on to slip almost near to its 100-DMA and went on to form the day’s low of 7588.65. No major recovery was witnessed and the Markets finally settled the day at 7603.20, posting a net loss of 155.60 points or 2.01% while forming a sharply lower top and lower bottom on the Daily Bar Charts.

MARKET TREND FOR WEDNESDAY, APRIL 06, 2016
The Markets are likely to see a modestly positive opening today. We can expect the Markets to open mildly positive and trade above its 100-DMA which are 7574 and this level is likely to act as important support for the immediate short term. It would be important for the Markets to trade above this 100-DMA which will keep them in a broad range consolidation. Any breach below 100-DMA will cause the Markets to get further weak.

The levels of 7640 and 7685 will act as immediate resistance levels for the Markets. The supports come in at 7575 and 7510 levels.

The RSI—Relative Strength Index on the Daily Chart is 53.3429 and it has reached its lowest value in last 14-days which is Bearish. Also, the RSI has set a fresh 14-period low while NIFTY has not yet and this is Bearish Divergence. The Daily MACD still remains bullish but it is moving towards reporting a negative crossover and the histogram slope is also seen rapidly decreasing. On the Candles, a Big Black Candle has appeared. This has established the credibility of the overhead resistance.

On the derivative front, the NIFTY April futures have shed over 9.26 lakh shares or 4.94% in Open Interest. This makes unwinding of long positions very much evident.

Coming to pattern analysis, the markets have held the levels of 7750 and the downward sloping trend line as sacrosanct resistance. This trend line, which is drawn from 8600 levels now trades around 7700 levels because of its downward slope. On its way up, the Markets will continue to resistance to these levels with the levels of 100-DMA acting as immediate support. So long as the Markets trade above 100-DMA, it will remain in a broad trading range with a downward bias.

Overall, the Markets currently remains in a broad trading range of 7700-7750 range on the upper side and 7475 levels on the lower side. Presently it continues to trade with a downward bias with it being more near to its lower base. So long as the Markets maintain itself above 100-DMA we will see it oscillating in a broad range. Any breach below 100-DMA will induce further weakness. We continue to reiterate cautious outlook on the Markets.

Milan Vaishnav,
Consulting Technical Analyst

Member: Market Technicians Association, (MTA), USA
Member: Association of Technical Market Analysts, (ATMA), INDIA

+91-98250-16331



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