MARKET TREND FOR FRIDAY, JANUARY 06, 2017
Precisely on the analyzed lines, the NIFTY resumed its up
move after three days of consolidation and tested its 200-DMA which stands at
8275 and closed a notch below that. We had mentioned in our previous edition
that post 300-odd points of rise given the consolidation of three days, the
Markets has been displaying underlying strength. Today, we fairly expect the up
move to continue with the NIFTY expected to open on a modestly positive note.
The behavior of the NIFTY vis-à-vis the levels of 8275 will be important to
determine if the Markets consolidate once again or continues with its up move.
The latter is more likely as supported by all relevant indicators.
For today, the levels of 8315 and 8365 will act as immediate
resistance levels for the Markets. The supports come in at 8235 and 8205
levels.
The RSI—Relative Strength Index on the Daily Chart is
59.6557 and it has reached its highest value in last 14-days which is bullish.
It does not show any bullish or bearish divergence. The Daily MACD is firmly
bullish as it trades above its signal line. On the Candles, a rising window
has occurred. This is usually a gap up and this often signals continuation of
the uptrend on the following day.
Looking at derivative figures is encouraging. The NIFTY
January futures have added yet another over 12.44 lakh shares or 7.10% in Open
Interest. This signifies that the previous up move has occurred with support of
fresh buying and addition of longs.
Pattern analysis also draws encouraging picture. The NIFTY
had confirmed a Double Bottom support in the 7900-7920 zones and after pulling
back from those levels, it had reached the upper area resistance of the broad
trading range that it had formed. Yesterday’s up move has shown an attempt by
NIFTY to break out of that trading range. It will have to move past and close
above 8275 or its 200-DMA in order to make a sustainable up move.
Overall, the only factor that raises some possibilities of
the NIFTY consolidating once again is the fact that it is yet to move past and
Close above its 200-DMA which is 8275 today. Once this happens, we will see
some more sustained up move in the Markets. Until this happens i.e. until NIFTY
moves past and closes above the 200-DMA, theoretically there are still some
chances of some more consolidation but that would once again remain in form of
intermittent bouts. We continue to advise positive outlook and recommend select
buying in event of any intermittent consolidation as undercurrent remains distinctly
buoyant.
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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