Tuesday, July 5, 2016

Daily Market Trend Guide -- Tuesday, July 05, 2016

The Markets posted its sixth day of gains yesterday and ended yet another day with gains. However, it has displayed some signs of impending weariness at higher levels. Today, we can expect the Markets to open on a modestly negative note and look for directions. We have a truncated week this time and we can fairly expect the Markets to trade in a capped range and consolidate at current levels which would be in turn, healthy for the Markets.

For today, 8395 and 8435 will act as immediate resistance levels for today. The supports come in lower at 8350 and 8305 levels.

The RSI—Relative Strength Index on the Daily Chart is 65.2047 and it has reached its highest levels in last 14-days which is bullish. It does not show any bullish or any bearish divergence. The Daily MACD has given a positive crossover and it is now bullish as it trades above its signal line.

On the derivative front, the NIFTY July futures have added over 3.24 lakh shares or 1.73% in Open Interest. The NIFTY PCR stands at 1.04 as against 0.98 yesterday.

Coming to pattern analysis, the Markets have not only managed to recover all of its losses post June 24th but have also managed to deliver a breakout by moving past its previous intermediate top of 8298. Having said this, the Markets are currently back into the upper rising channel drawn from the lows of February. Given the fact that the Markets have posted gains for six straight sessions, it is very much likely that it sees some consolidation at higher levels. If it actually does, it would be, in fact healthy for the Markets. All lead indicators very clearly suggest that the uptrend in the Markets remains intact and the under current remains buoyant.

All and all, we are likely to see a modestly negative opening in the Markets today, the undercurrent continues to remain buoyant. In event of consolidation happening, we will see some sectoral rotation as well. It is best advised to avoid shorts and make selective purchases in the sectors that were lagging so far. While utilizing each up moves in protecting profits, cautious optimism is advised for the day.

Milan Vaishnav, CMT
Technical Analyst

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


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