MARKET TREND FOR TUESDAY, FEBRUARY 14, 2017
The Markets ended fifth day in a row under fierce
consolidation while it ended with nominal gains of 11.50 points or 0.13% post
seeing a remarkable recovery from the lows of the Day. The NIFTY50 is
witnessing strong consolidation on Close basis with flat endings while
oscillating in a broad range on intraday basis. While this indicates very
strong undercurrent, it has also established 8820-8830 zones as its immediate
very short term resistance. With each passing day under consolidation, Markets
are increasing its chances of a sharp move on both side and any movement past
8820-8830 zones will see some more up move despite the fact that the Markets
continue to trade in overbought trajectory.
For today, the levels of 8830 and 8900 will continue to act
as major immediate resistance levels while supports come in at 8730 and 8675
levels.
The RSI—Relative Strength Index on the Daily Chart is
73.3871 and it does not show any failure swing. It continues to trade in
“overbought” terrain and also reports a Bearish Divergence as the NIFTY has set
a fresh 14-period high while RSI has not. The Daily MACD is still bullish while
trading above its signal line but as mentioned in our previous notes as well,
it is moving towards reporting a negative crossover post flattening its
trajectory. On the Candles, a long lower shadow occurred. This formation
resembles a hanging man baring the fact that it has some upper shadow as well.
Such formations often cause the Markets to consolidate while halting its up
move. Such and similar formations have occurred couple of times over past five
sessions and has caused the Markets to undergo strong consolidation after
pausing the up move.
The NIFTY February futures have added over 6.32 lakh shares
or 2.92% in Open Interest. This signifies buoyant undercurrent in the Markets.
The pattern analysis show quite distinctive and classical
consolidation on the Daily Charts.
On the Closing basis, the Markets have
remained nearly flat in last five days by posting nominal gains or losses and
remaining more or less flat. While intraday, the sessions have remained quite
volatile in a broad range as it saw NIFTY oscillating on either side. Such
behavior often signifies strong undercurrent in the Markets and after spending
some time under such congestion, Markets usually makes and upward move.
Overall, if the NIFTY moves past 8820-8830 zone, it may see
some more up move towards 8900-mark despite the fact that it trades overbought.
Strong Markets tend to get overbought and remain overbought for some time.
However, the behavior of the Markets vis-à-vis the levels of 8820-8830 zones
and the intraday trajectory that it forms during the day will be critical to
watch out for. The strong global equity set up is likely to aid the attempt of
our Markets to move up. However, given the overbought nature of the Markets,
fresh purchases may be made but also guarded equally vigilantly at higher
levels.
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
