MARKET TREND FOR FRIDAY, JUNE 24,
2016
The Markets showed a sharp recovery
yesterday and ended with gains in anticipation of England remaining within the
EU. However, given the current highly likelihood of Brexit happening, the
Markets are set to see a sharply lower opening today. The global markets trade
lower and this will have very sharp and deep knee jerk reactions in local
markets as well. It would be important to note that this is a major global
event and though technicals would come into play, but it would be later when
the dust settles and some exact impact of the event is precisely known.
All supports will come into play today.
With likely lower opening by 200-odd points expected, the Markets are likely to
test the upward rising trend line drawn from February lows and might test
8070-8020 levels today.
The RSI—Relative Strength Index on the
Daily Charts is 63.0870 and it remains neutral as it shows no bullish or
bearish divergence or any failure swings. The Daily MACD stays bearish as
trades below its signal line. On the Candles, an engulfing bullish pattern is seen and since it has happened near the
high levels, it indicates a potential top.
On the derivative front, the NIFTY June
futures have added over 3.20 lakh shares or 2.10% in Open Interest. The NIFTY
PCR stands at 1.18 today.
Coming to pattern analysis, we had
mentioned in our yesterday’s edition that the level of 8260 is a lower high
that the Markets have formed at 8295. These levels have been anyway acting as
immediate resistance for the Markets and even yesterday’s up move has not seen
the Markets making any breakout on the upside. Having said this, with the gap
down opening eminent, the Markets may test 8070-8020 levels and if the weakness
persists, the possibility of the Markets testing the 50-DMA cannot be ruled
out.
However, more importantly, we need to focus
on something more important. Even if the Markets test 50-DMA, there will still
be no structural damage on the Charts as the Markets currently trades above all
of its moving averages. It is best advised to stay away from the Markets with
restricting exposures. It is further advised to wait for appropriate levels
before some quality purchases are made. Though some short term impact cannot be
ruled out, eventually quality purchases will pick up in coming days.
Milan
Vaishnav, CMT
Consulting Technical Analyst
Member: Market
Technicians Association, (MTA), USA
Member:
Association of Technical Market Analysts, (ATMA), INDIA
+91-98250-16331
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