MARKET TREND FOR FRIDAY, JULY 01,
2016
The Markets continued to recover and had a
healthy expiry session yesterday as it ended yet another day with gains. Today,
we are likely to see the Markets taking a breather from the gaining streak. We
can fairly expect the Markets to open on a flat note and look for directions.
The levels of 8300 would be key levels to watch out for and it would be
interesting to see if the Markets attempt a break out and if they do, it would
be further interesting to see if the higher levels are sustained.
For today, the levels of 8300 and 8345 will
act as immediate resistance levels or the Markets. The supports come in much
lower at 8240 and 8175 levels.
The RSI—Relative Strength Index on the
Daily Chart is 61.0283 and it does not show any failure swing. However, the
NIFTY has formed a fresh 14-period high whereas the RSI has not and this is
Bearish Divergence. The Daily MACD stays bearish as it continues to trade below
its signal line.
While having a look at pattern analysis, we
had mentioned on the day Brexit voted to exit Europe that the Markets will show
a sharp knee jerk reaction to this but eventually techincals would take over
and we will see the Markets recovering gradually. Over last 5 days, this is
what precisely has happened. The Markets anyway had pattern resistance before
this even at 8294-8300 levels and today the Markets are again back to these
levels. So, individually speaking, with all the Brexit volatility recovered and
dealt with, the Markets faces a resistance around 8295-8310 levels. It would be
interesting to see the behavior of the Markets vis-à-vis this level and some
amount of consolidation at higher levels cannot be ruled out.
All and all, it would be healthy if the
Markets see some amount of consolidation at higher levels as the Markets have
seen rise of nearly 375-odd points from the Friday’s intraday lows. Any
consolidation if we see, would be very healthy for the Markets in the long
term. The lead indicators suggest some weariness in the Markets at higher
levels and it would be prudent if we use all up moves from here on to book and
protect profits in existing positions. Fresh position should be kept limited
and stock specific. Overall, cautious outlook is advised for the day.
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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