MARKET TREND FOR MONDAY, DECEMBER 05, 2016
Equity Markets remained in corrective mode and more so in
the second half of the session on Friday as the NIFTY ended in the read while
closing below its 200-DMA once again. Today, we can expect a quiet start to the
Markets but in the same breath, we do not expect a run-away rally in the
Markets so long as it continues to trade below its 200-DMA. Markets have an
external event of RBI Monetary Policy on 7th of December to react to
but until then it is likely that we will see the NIFTY remaining in a broad
range and consolidate while remaining vulnerable to selling bouts so long as it
continues to trade below the 200-DMA which is 8169 today.
For today, the levels of 8125 and 8175 will act as immediate
resistance levels for the Markets. The supports are expected to come in at 8050
and 8010 levels.
The RSI—Relative Strength Index on the Daily Chart is
39.5260 and it is neutral as it shows no bullish or bearish divergence or any
failure swings. The Daily MACD is bullish as it trades above its signal line.
On the Candles, a falling window occurs. This means a gap and it shows
that possibility of bearish sentiment will persist on the following day.
On the derivative front, the NIFTY December futures have
shed over 3.68 lakh shares or 2.29% in Open Interest. This implies some
shedding of longs from the system.
Coming to pattern analysis, the NIFTY has formed an
immediate bottom at 7929 and has attempted a pullback since then. In the
process, the NIFTY has also managed to move past its 200-DMA but the previous
two sessions have seen it correcting which saw the NIFTY trading once again
below its 200-DMA. In the present scenario, we will see the levels of 200-DMA
acting as the immediate resistance at Close levels for the NIFTY. On the other
hand, even if the NIFTY continues to see corrective decline and tests 8010-8025
levels and bounces back, it will still be within the pattern and the
possibility of its confirming the bottom still remains if these levels are not
broken.
All and all, until the NIFTY breaches the 8010 levels, there
will be no breach of the current pattern support and therefore so long as these
levels are sustained, we would advice that no major shorts should be created.
There is strong possibility that the NIFT takes support at current levels or
around 8010-8025 levels as these are important pattern supports. We continue
with our recommendation of accumulating quality stocks with each downside until
these levels are sustained. Overall, positive caution is advised in 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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