MARKET TREND FOR FRIDAY, OCTOBER 14,
2016
Domestic equity markets traded very much on
expected lines as weak technicals forced a lower opening and the Markets ended
with a deep cut showing a clear downward breach from the current Descending
Triangle formation. Today, we can expect a stable opening but overall, in
coming days, it would not be a surprise if the Markets test its 100-DMA as it
would also complete measuring implications of the current pattern on the Daily
Charts. On the upside, the level of 8690 will now act as formidable resistance
in event of any pullbacks.
For today, the levels of 8620 and 8645 will
act as immediate resistance levels and the supports will come in at 8540 and
8485 levels.
The RSI—Relative Strength Index on the
Daily Chart is 39.8437 and it has reached its lowest value in last 14-days
which is Bearish. It does not show any bullish or any bearish divergence. The
Daily MACD stays bearish as it trades below its signal line. On the Candles, a
falling window occurred. This is a gap and a big candle that occurred in
this formation established the credibility of the downward breach from the
current support level.
On the derivative front, the NIFTY October
futures have shed over 14.36 lakh shares or 6.77% in Open Interest indicating
good amount of unwinding of long positions. The NIFTY PCR now stands
significantly below 1.
Coming to pattern analysis, the NIFTY was
in a small Descending Triangle formation over couple of days. The neckline support
was at 8690 which also coincided with the 50-DMA. In yesterday’s session the
NIFTY has given a sharp downward breach from this bearish formation. Going by
the measuring implications, it would be no surprise if the Markets tests its
100-DMA which would act as a major support at Close levels.
Overall, there might be some technical
pullback but in that case, the level of 8690 will act as formidable resistance
to any up move. It would be important to note that stock specific performance
will remain the highlight of the session and this will continue as the Markets
will individually reward good stocks who would report good numbers. Apart from
this, the negative bias is expected to continue. It is advised to keep overall
exposure to moderate levels while maintaining highly cautious outlook on the
Markets.
Milan Vaishnav, CMT
Technical Analyst
(Research
Analyst, SEBI Reg. No. INH000003341)
Member:
Market Technicians Association, (MTA), USA
Canadian Society of Technical Analysts, (CSTA), CANADA
Association of Technical Market Analysts, (ATMA), INDIA
http://milan-vaishnav.blogspot.com
+91-98250-16331
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