MARKET TREND FOR TUESDAY, AUGUST 02, 2016
The Markets traded mostly on analyzed lines yesterday as it
expectedly witnessed a intraday selling bout as it came off over 100-odd points
from the high point of the day to end on absolutely flat note. Today, we can
fairly expect such consolidation to continue in the Markets. We can expect the
Markets to start on a flat not and look for direction with the levels of
8590-8570 acting as pattern supports. The intraday trajectory that the Markets
form would be critical to decide the trend for the day.
For today, the levels of 8700 and 8725 will act as immediate
resistance levels for the Markets. The supports come in at 8590 and 8565
levels.
The RSI—Relative Strength Index on the Daily Chart is
65.9781 and it remains neutral as it shows no bullish or bearish divergence or
any failure swings. The Daily MACD has turned bearish as it has reported a
negative crossover and now trades below its signal line.
On the derivative front, the NIFTY August futures have added
over 3.49 lakh shares or 1.58% in Open Interest. Some fresh shorts are being
witnessed and the NIFTY PCR stands unchanged at 0.94 today.
Coming to pattern analysis, the Markets have continued to
remain in the upward rising channel drawn from February lows. However, the ends
of the channel are converging, i.e. getting narrower and therefore some
decisive move by the Markets in coming days cannot be ruled out. Until now, the
Markets have continued to take support on the lower rising end of the channel
and the Markets will see the upward momentum so long as it continues to do so.
Any breach below the levels of 8560-8550 will see the Markets weakening for the
immediate short term.
Overall all, as of now, the primary trend of the Markets
remain intact and any corrective activity is expected to remain restricted to
intraday selling bouts like one that we witnessed yesterday or very limited
downsides amidst range bound movements. However, also as mentioned in yesterday’s
edition, the caution levels in the Markets remain at elevated levels and all
existing profits should be guarded vigilantly at higher levels. Continuance of
cautious outlook is advised on the Markets.
Milan Vaishnav, CMT
Technical Analyst
Member: Market Technicians Association, (MTA), USA
Member: Association of Technical Market Analysts, (ATMA), INDIA
+91-98250-16331
