Wednesday, July 20, 2016

Daily Market Trend Guide -- Wednesday, July 20, 2016

Markets displayed great amount of volatility and strength as well as it see-sawed nearly 100-odd points intraday to finally end with modest gains. Today, Markets are expected to see a flat to modestly positive opening and look for directions. It is most likely that the Markets will continue to consolidate and some amount of volatility will continue to remain ingrained and therefore, it keeps analysis for today once again on similar lines like yesterday.

The levels of 8575 and 8625 will act as immediate resistance levels for the Markets today. The supports come in at 8475 and 8430 levels.

The RSI—Relative Strength Index on the Daily Chart is 67.4335 and 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 derivative front, the NIFTY July futures have added over  5.19 lakh shares or 2.32%  in Open Interest. The NIFTY PCR stands at 1.03 as against 1.06 yesterday.

Coming to pattern analysis, the Markets have been consolidating after it moved upwards post breaking out above 8295 levels. It has been seeing a range bound consolidation since last couple of days but at the same time, the Markets have displayed good amount of resilience at higher levels. The levels of 8600-8610 have now become a intermediate top for the Markets and fresh rally would occur only after the Markets move past these levels. Until this happens, we will see the Markets oscillating in a capped range. However, the downsides would be limited as inherent strength continues to remain intact.

Overall, the underlying buoyancy in the Markets remains intact. The Markets may not see a runaway rally immediately but the resilience will continue to show and the downsides would be limited. In form of corrections, we might witness some limited downsides and volatile intraday movements. While refraining from shorts all downsides should be utilized to make selective purchases as sector rotation is much evident in the Markets and stock specific out-performance will continue.

Milan Vaishnav, CMT
Technical Analyst

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


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