Tuesday, July 19, 2016

Daily Market Trend Guide -- Tuesday, July 19, 2016

MARKET TREND FOR TUESDAY, JULY 19, 2016
Markets traded precisely on analyzed lines as it gave up at its intraday high, witnessed a selling bout from higher levels and consolidated to end with minor losses. We continue to keep our analysis for today on similar lines. Markets are expected to see a quiet to modestly positive opening and will look for directions. It is very much likely that the yesterday’s high has now become an immediate top for the Markets and the Markets will continue to consolidate while maintaining this level as its intermediate top.

For today, the levels of 8585 and 8595 will act as immediate resistance levels for the Markets. The supports come in much lower at 8460 and 8410 levels.

The RSI—Relative Strength Index on the Daily Chart is 66.3587 it remains neutral as it shows no bullish or bearish divergence or any failure swings. The Daily MACD stays bullish as it continues to trade above its signal line. On the Candles, a big black candle has occurred. Since this has occurred near a resistance area after a good amount of up move, this has added credibility to the overhead resistance for the Markets.

On the derivative front, the NIFTY July futures have shed over 1.39 lakh shares or 0.62% in Open Interest. This shows some unwinding from higher levels in the Markets.

Coming to pattern analysis, as mentioned often in our previous editions, the Markets have put on significant gains after breaking out above its previous top of 8295 levels. Post that, it has consolidated in between for a couple of days and it is now tracking the upper line of the upward rising channel that it has formed from its February lows. Having said this, though it trades comfortable within this rising channel, it had got overbought and some amount of consolidation was imminent. The Markets have shown signs of fatigue in previous two sessions and yesterday, it witnessed a selling bout from higher levels to end with minor losses. With today’s modestly positive opening expected, we can fairly expect the Markets to consolidate once again at higher levels.

As we keep our reading for the Markets on similar lines, even with the positive opening expected, the levels of 8595-8600 levels will continue to act as immediate resistance levels for the Markets. Since the Markets have continued to display great amount of inherent strength, shorts should be avoided but the up moves should be utilized to protect profits at higher levels and any downsides should be used to make quality purchases as sectoral rotation continues in the Markets.


Milan Vaishnav, CMT
Technical Analyst

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

+91-98250-16331

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