Gemstone Equity Research & Advisory Services

Thursday, May 26, 2016

Daily Market Trend Guide -- Thursday, May 26, 2016

MARKET TREND FOR THURSDAY, MAY 26, 2016

Yesterday’s strong up move has thoroughly altered the short term structure of the Daily Charts. The Markets have now moved well beyond its 200-DMA and has further inched near its resistance zones of 7970-7990 levels. Today, we will again see some modestly positive opening and will see if the Markets achieve an breakout on the upside. The Markets will also remain heavily dominated with rollovers as today is the expiry of current derivative series.

The levels of 7990 and 8035 will act as immediate resistance levels for today. The supports come in much lower at 7910 and 7860 levels.

The RSI—Relative Strength Index on the Daily Chart is 59.4248 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 still bearish as it trades below its signal line.

On the derivative front, the NIFTY May futures have shed over 21.61 lakh shares or 15.81% in Open Interest. The June futures added over 62.30 lakh shares or 71.99% in Open Interest.

Coming to pattern analysis, with the yesterday’s strong up move, the overall structure of the Daily Charts have altered a bit. The Markets still continue to remain in a triangle formation but its range is widened and also because of that, it trades exactly around 3/4^th of its apex. Having said this, it has also moved past its 200-DMA yesterday and now trades around its pattern resistance. Any higher opening today will result into an attempted breakout for the Markets on the up side if they open positive and manage to sustain above that.

Overall, the Markets rest at interesting juncture. Speaking purely on technical lines, the Markets are likely to see a modestly positive opening and if it capitalizes on this, it may achieve a possible breakout on the upside. However, the opening levels and some advancement will take the Markets around its resistance zones of 7970-7990 levels and it would be critically important to see how the Markets deals with these levels. While continuing to avoid shorts even at higher levels, selective purchases may be made.

Milan Vaishnav,

Consulting Technical Analyst

Member: Market Technicians Association, (MTA), USA
Member: Association of Technical Market Analysts, (ATMA), INDIA

www.EquityResearch.asia

http://milan-vaishnav.blogspot.com

+91-98250-16331

milan.vaishnav@equityresearch.asia

milanvaishnav@yahoo.com

Wednesday, May 25, 2016

Daily Market Trend Guide -- Wednesday, May 25, 2016

MARKET TREND FOR WEDNESDAY, MAY 25, 2016

The Markets took support on 50-DMA couple of times yesterday and after oscillating in a tight range ended the day with modest gains. The Markets have successfully kept its head above 50-DMA and today we are likely to see a gap-up opening in the Markets. There are bright chances that the Markets see a decently positive opening and look for directions. The likely opening levels will see the Markets opening around its 200-DMA which stands at 7792 today and the behavior of the Markets vis-à-vis this level would be critical to watch out for.

For today, the levels of 7792 and 7845 will act as immediate resistance levels for the Markets. The supports come in at 7715 and 7680 levels.

The RSI—Relative Strength Index on the Daily Chart is 46.8539 and it remains neutral as it shows no bullish or bearish divergence or failure swings. The Daily MACD stays bearish as it trades below its signal line.

On the derivative front, the NIFTY May futures have shed over 9.52 lakh shares or 6.52% and June series added over 21.81 lakh shares or 33.70% in Open Interest resulting in net addition of OI. The NIFTY PCR stands at 0.86 as against 0.83 yesterday.

Coming to pattern analysis, the Markets have been in very tight trading range and have been oscillating in between its DMAs for couple of days of time now. After remaining briefly in symmetrical triangle formation for couple of days and while resisting to its 200-DMA, the Markets gave a mild downside breach. However, it has managed to keep its head above 50-DMA which stands at 7736, is likely to see a strong gap up opening today. However, it becomes extremely important to note that the likely gap up opening will see the Markets opening around its 200-DMA. Even if the Markets moves past 200-DMA and manages to inch upwards 7835-7850 range, it will be still within the pattern resistance levels.

Overall, it would be critically important to see if the Markets are able to build up further on the expected positive opening. For a fresh breakout to occur on the upside, the Markets not only will have to move past the 200-DMA but will have to move past the resistance zones of 7840-7850 as well. Until this happens, it will continue to oscillate in the same tight range heading now where with good amount of volatility ingrained in it. Emphasis should be continued to be laid on protecting profits at higher levels until the mentioned levels are breached on the upside.