MARKET TREND FOR FRIDAY, AUGUST 19, 2016
Though the Markets ended the day yesterday with modest
gains, the levels of 8700-8725 continued to remain as intermediate top for the
Markets. Today as well, the Markets are likely to see a flat to mildly negative
opening and therefore this keeps our analysis for today on similar lines that
of yesterday. Though the Markets may open flat to mildly negative the overall
movement is likely to remain range bound and the mentioned levels will continue
to act as resistance.
The levels of 8700-8725 will continue to act as immediate
resistance levels for the Markets. The supports come in at 8640 and 8605
levels.
The RSI—Relative Strength Index on the Daily Chart is 59.1958 and this remains neutral as it shows
no bullish or bearish divergence or any failure swings. The Daily MACD is
bearish as it trades below its signal line.
On the derivative front, the NIFTY August futures have shed
over 7.34 lakh shares or 2.99% in Open Interest. This shows some amount of
short covering that have taken place in yesterday’s session.
Coming to pattern analysis, after falling out of the upward
rising channel drawn from February lows, the Markets have continued to keep the
levels 8700-8725 sacrosanct as its immediate resistance. The Markets have not
moved past these levels and very much as analyzed in previous editions, it has
shown limited downsides as well. Much of the corrective activity has come in
the form of range bound sideways movement and currently the Markets continue to
trade within a small congestion zone while the mentioned levels continue to act
as immediate resistance levels for the Markets.
Overall, we will not see any runaway rise until the Markets
moves past the levels of 8700-8725. Until this happens, we will see the Markets
remaining in corrective mode and this will result into range bound volatile
movements, though the downsides are likely to remain limited. We continue to
reiterate our view to continue to utilize intermittent downsides to make
selective purchases while vigilantly protecting profits at higher levels.
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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