Wednesday, December 7, 2016

Daily Market Trend Guide -- Wednesday, December 07, 2016

MARKET TREND FOR WEDNESDAY, DECEMBER 07, 2016
While continuing to trade very much on expected lines, the NIFTY ended the day with just minor gains after coming off from its highs in the last hour of the day. It continued to consolidate heavily and also continue to resist to its 200-DMA at Close levels. Today as well, we expect the Markets to continue to consolidate with positive bias. Today, we have RBI Monetary Policy to react to and a 50 bps cut in the Repo Rate is expected. Banks will particularly react to this as we move ahead in the session and volatility is expected to remain ingrained and the levels of 200-DMA will be critical to watch out for.

For today, the levels of 8179 and 8250 will remain immediate resistance levels for the Markets. The supports come in at 8090 and 8025 levels.

The RSI—Relative Strength Index on the Daily Chart is 43.3319 and it remains neutral as it continue to show no bullish or bearish divergence or any failure swings. The Daily MACD remains bullish while trading above its signal line. No significant Candle was observed apart from a spinning top was observed in the yesterday’s session.

On the derivative front, the NIFTY has shed 21,150 shares or just 0.14% in Open Interest. The OI figure has remain unchanged signifies no major shorts or longs were added in the system and the NIFTY remained direction-less on the Daily Charts.

While having a look at pattern analysis, the NIFTY is trying hard to confirm the bottom that it formed at 7929 at Close levels. After attempting to form base at this level, the NIFTY showed a decent pullback and retraced some portion of that pullback. In the process, it currently trades below the 200-DMA once again. Currently, it would be important for the Markets to make a higher top and resume its up move. It would also be crucially important for the Markets to move past the 200-DMA and sustain above that.

All and all, the levels of 200-DMA continue to remain crucial and it is imperative for the NIFTY to move past that level and Close above that. This will confirm the immediate bottom for the NIFTY and for this resumption of the pullback is necessary. In today’s session, some volatility will remain as the Markets  will react to the RBI Monetary Policy. The lead indicators and the F&O data suggest some more consolidation but that would remain with a positive bias. All dips are likely see short covering and some fresh purchases. With sector rotation and some stock specific out-performance likely, continuation of cautiously positive outlook is advised for the day.

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


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