Thursday, August 18, 2016

Daily Market Trend Guide -- Thursday, August 18, 2016

MARKET TREND FOR THURSDAY, AUGUST 18, 2016
Range bound consolidation continued in the Markets as it continued to remain in sideways trajectory on Daily Charts while ending the day with modest losses. Today as well, the Markets are expected to open on a flat to modestly positive note and look for directions and this keeps our analysis on similar lines that of yesterday. We will continue to see the Markets trading in a well defined range while the levels of 8700-8725 will continue to act as immediate top for the Markets for the near term.

For today, the levels of 8670 and 8700 will act as immediate resistance levels for the Markets. The supports come in at 8610 and 8565 levels.

The RSI—Relative Strength Index on the Daily Chart is 55.7773 and this remains neutral as it shows no bullish or bearish divergence or any failure swings. The Daily MACD stays bearish as it trades below its signal line.

On the derivatives front, the NIFTY August futures have shed over 2.56 lakh shares or 1.03% in Open Interest. This signifies some creation of fresh short positions in the Markets again.

While having a look at pattern analysis, as mentioned often in our previous editions, though the Markets have fallen out of the rising channel that is drawn from the February lows, the corrective activity has been in form of more of sideways range bound movements than any major downsides. Keeping in line with this fresh pattern, we can fairly expect the Markets to continue to exhibit limited downsides while at the same time, the levels of 8700-8725 will continue to act as important resistance and intermediate top for the Markets. No sustainable up move shall occur until the Markets move past this level.

Overall, any corrective activity, especially in the form of a sideways movement is healthy for the Markets in the long term. While the overall trend remaining intact and with the Markets continuing to exhibit inherent buoyancy, we continue to reiterate the approach of using any intermittent downsides to make selective purchases. Until the levels of 8700-8725 are breached on the upside, all profits will required to be protected vigilantly though major shorts should be avoided. More preservation of cash to make selective purchases during dips should be done maintaining a positive caution 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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