Tuesday, May 31, 2016

Daily Market Trend Guide -- Tuesday, May 31, 2016

MARKET TREND FOR TUESDAY, MAY 31, 2016
The Markets are trading near its 8 month high and at the same time have started to show some sign of fatigue at higher levels. Today, the Markets are once again expected to start on a flat to mildly positive note but at the same time the intraday trajectory will be important to watch out for as there are chances that the Markets may witness some consolidation from higher levels.

For today, the levels of 8210 and 8245 will act as immediate resistance levels for the Markets. The supports come in much lower at 8120 and 8060 levels.

The RSI—Relative Strength Index on the Daily Chart is 69.8945 and it has reached its highest value in last 14-days which is bullish. However, it is nearly overbought and it does not show any bullish or bearish divergence. The Daily MACD is bullish as it trades above its signal line. A Spinning Top on the Candles shows some potential fatigue in the Markets.

On the derivative front, the NIFTY June futures have added over 7.57 lakh shares or 3.62% in Open Interest. The bulk of the OI remains on the long side, nearly to the extent of 82%.

Coming to pattern analysis, the Markets have successfully broken out of the symmetrical triangle on the daily Charts. Yesterday, it tested its technical target of 8200 as a intraday high. We had mentioned often in our previous editions that a logical targets can be 8200 levels if the Markets breaks out of the triangle consolidation. Having said this, it becomes important to note that the Markets have started to show some signs of fatigue at higher levels and it should not be surprising if we see some minor corrections from higher levels.

Overall, some consolidation from higher levels cannot be ruled out. It is also important to note that the level of 8242 is the 61.8% retracement on Fibonacci from 9112-6825 correction and therefore possibility of some correction setting in becomes even more likely. It is likely that we see some brief but intermittent selling bouts from higher levels. However, it is advised that shorts should be avoided at any levels and any up moves should be utilized to book and protect profits.

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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