MARKET TREND FOR TODAY January 3, 2012
The Markets had an expectedly direction-less session with bias towards upside as it spent the entire day on low volumes and finally ended the day at 4636.75, posting a net gain of 12.45 points or 0.27%, starting the new year and the first day of the week on very moderate note. The volumes too remained below average. However, the Markets have still continued to form a lower top and lower bottom on the Daily High Low Charts, the only technical difference being that it ended the day near the high point of the day which is important.
For today, since the Markets have ended the day near the high point of the day, it is expected to technically continue its up move. This would be supported by positive global markets. Aided by favourable technicals and supporting global markets, expect the Markets to open on a positive note and trade positive at least in the initial trade.
For today, the levels of 4675 and 4720 are likely to act as resistance and the levels of 4625 and 4590 are likely to act as supports. The red-line shown in the Charts above is the support it broke in the immediate past and is likely to act as resistance and the Markets will have to move past that levels which are 4675 which shall enable it to move ahead until 4790 levels.
The RSI—Relative Strength Index on the Daily Chart is 40.0314 and is neutral as it shows no negative divergence or failure swing. The Daily MACD continues to remain bullish as it trades above its signal line.
On the Candles too, some positive signs are seen. A hammer occurred (a hammer has a long lower shadow and closes near the high). Hammers must appear after a significant decline or when prices are oversold (which appears to be the case with NIFTY) to be valid. When this occurs, it usually indicates the formation of a support level and is thus considered a bullish pattern.
A hanging man occurred (a hanging man has a very long lower shadow and a small real body). This pattern can be bullish or bearish, depending on the trend. If it occurs during an uptrend it is called a hanging man line and signifies a reversal top. If it occurs during a downtrend (which appears to be the case with NIFTY) it is called a bullish hammer.
All and all, even though the Markets are likely and set to give a positive opening, the volumes will continue to place a critical role in maintain the trajectory and sustaining the stronger opening. Any lack of volumes will continue to keep the Markets volatile and in a range. However, the bias still continues to be on up side and thus it is advised that shorts should be avoided even in case of temporary weakness and opportunities should be used to make selective purchases. Overall positive outlook is advised for today.
Milan Vaishnav,
Consulting Technical Analyst,
+91-98250-16331
