MARKET TREND FOR WEDNESDAY, DECEMBER 28, 2016
We had mentioned in our previous edition that given the
short positions in the Markets, a technical pullback cannot be ruled out. The
Markets yesterday gave a much expected relief rally and held on to its pattern
support of the 7900-7920 zones while it ended the day on a decent gain.
Yesterday’s session was important in
many ways as it re-established the 7900-7920 as
its major pattern support and also prevented any major breakdown on the
Charts. Today, we can expect a stable opening and NIFTY is likely to continue
with its up move at least in the initial trade. However, the NIFTY is still not
completely out of the woods and its maintenance of certain levels will remain
of critical importance going down the remaining week.
For today, the levels of 8065 and 8110 will act as immediate
resistance levels for the Markets. The levels of 7960 and 7900 will continue to
act as critical supports.
The RSI—Relative Strength Index on the Daily Chart is
42.8907 and it is neutral as it shows no bullish or bearish divergence or any
failure swings. The Daily MACD is still bearish as it trades below its signal
line. If the NIFTY maintains its current levels and consolidate, we might be
again moving towards a positive crossover on this indicator. On the Candles, a
Big White Candle has occurred. This formation is significant. This Big
White Candle has occurred near a important pattern support and therefore it
has added credibility to this support.
On the Derivative front, the NIFTY December futures have
shed over 11.30 lakh shares or 7.85% in
Open Interest. Though given the expiry and rollovers, these figures may
not be of any singular importance but it makes evident that there was a large
scale short covering in the previous session.
If we have a look at pattern analysis, the NIFTY had closed
mildly below 7900-7920 support zones. This was a important pattern support in
form of a Double Bottom. We had mentioned in our previous edition that opening
and sustaining above 7900-7920 zones would be important for the Markets. In
coming days, if the NIFTY consolidates these levels will continue to act as
important supports.
Overall, we might continue to see the up move being
continued in the initial trade. However, NIFTY has much to cover beyond a day
of pullback and it is likely to continue to consolidate at higher levels with
positive bias. Today is a penultimate day of the expiry of current derivative
series and the session will remain dominated with rollovers. However, sectors
like FMCG, select Pharma stocks and IT along with select pockets of Energy is
likely to see out-performance. Unrelenting US
Bond Yields and strength of the USD will have to be watched for.
Milan Vaishnav, CMT
Technical Analyst
(Research Analyst, SEBI Reg.
No. INH000003341)
Member:
Market Technicians Association, (MTA), USA
Canadian Society of Technical Analysts, (CSTA), CANADA
+91-98250-16331
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