Friday, August 4, 2017

MARKET OUTLOOK FOR FRIDAY, AUG 04, 2017

MARKET OUTLOOK FOR FRIDAY, AUG 04, 2017
In our previous note, we had mentioned that technical factors will continue to weigh heavy on the Markets. The overbought Markets continued to see consolidation today and saw a modest decline of 67.85 points or 0.67% on Thursday. Two things have come to light in a very dominant manner. One, the zones of 10114-10140 remain very critical levels to watch out for, and Second; we are seeing huge amount of short positions being added which is likely to keep overall downsides limited.
The levels of 10090 and 10140 will act as immediate resistance levels for the Markets. Supports come in at 9970 and 992
5 levels.
The Relative Strength Index – RSI on the Daily Chart is 63.5319 and it has just crossed from a topping formation which is bullish. The RSI has marked a fresh 14-period low which is bearish. Further, with the RSI setting a fresh 14-period low and NIFTY not doing so has resulted into Bearish Divergence as well. The Daily MACD still remains bullish while trading above it signal line but is moving sharply towards reporting a positive crossover.
The pattern analysis suggests that the Markets are likely to continue to retrace some more from a sharp rising wedge formation on the Close Charts. The immediate pattern support that it can look out for is the short term 20-DMA.
Overall, the lead indicators very clearly suggest that some temporary weakness is likely to continue to persist for some more time. At the same time, the continued increase in the Open Interest also point towards addition of shorts in the system. The best method to approach such Markets would be strictly avoiding any significant short positions. It is best advised to sit-through any corrective moves and utilize downsides in making select purchases.
Milan Vaishnav, CMT
Technical Analyst
(Research Analyst, SEBI Reg. No. INH000003341)
Member:
Market Technicians Association, (MTA), USA
Canadian Society of Technical Analysts, (CSTA), CANADA

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