Wednesday, April 27, 2016

Daily Market Trend Guide -- Wednesday, April 27, 2016

MARKET TREND FOR WEDNESDAY, APRIL 27, 2016
Speaking purely on technical grounds, the Markets have ended near the high point of the day yesterday and today we can fairly expect the Markets to continue with its up move, at least in the initial trade. Having said this, it still becomes important to note that the Markets have not yet achieved a clear breakout on the Daily Charts and have still chosen to remain below the upper band resistance level of 7978. It would be today, if at all, that the Markets will attempt to achieve a breakout.


Today, the levels of 7980 and 8030 will act as immediate resistance for the Markets. The Supports will come much lower at 7858 and 7810 levels.

The RSI—Relative Strength Index on the Daily Chart is 67.4561 and it does not show any failure swing. The NIFTY has formed a fresh 14-period high whereas RSI has not yet and this is Bearish Divergence. The Daily MACD still remains bullish as it trades above its signal line. On the Candles, an Bullish Engulfing Pattern has occurred. However, its importance on the upper side is diminished as it has occurred during an uptrend. On the contrary, it may form a potential top once again. However, this requires confirmation today.

On the derivative front, the rollovers continued as the NIFTY April futures shed over 22.21 lakh shares or 15.86% in Open Interest. The May Futures added over 60.08 lakh shares or 103.23% in Open Interest.

Coming to pattern analysis, the Markets formed its intermediate top at 7978 levels on April 21st, and then corrected a bit from there. The Markets took supports at its 200-DMA which stand at 7858 today and remained in this 120-odd point trading range. Yesterday, even after the rise the Markets have not moved past 7978 levels and therefore have not achieved any clear breakout. It would attempt to have a breakout today. If the Markets manage to move past the 7978 levels and sustain above that, we will see some more upsides in the Markets. 
However, the lead indicator shows some very minor signs of tiredness in the Markets and if the Markets do not move past 7978 levels, we will see them continuing to consolidate once again.

Overall, today, we can fairly expect the Markets to attempt a breakout if it moves past 7978 levels. However, if that happens we will see the Markets testing the pattern resistance of 8030 levels. If this does not happen, we will once again continue to see the Markets consolidating once again. It is advised to continue to keep fresh purchases highly stock specific and maintain cautious outlook for the day.


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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