Daily Market Trend Guide -- Monday, January 11, 2016

MARKET REPORT                                                                                       January 11, 2016

The Markets ended the day on Friday on a modestly positive note but it did so in a range bound and capped session. The Markets saw a decent opening and formed its intraday high of 7634.10 in the early morning trade. However, soon after recording these levels, the Markets pared nearly all of its opening gains. It remained in a falling trajectory and at one point of time pared nearly all of its opening gains to trade flat. The second half of the session saw some pullback coming in as the Markets attempted to recover its morning gains. It did manage to recover most of the morning gains which it had at the time of opening. The Markets went very near to its opening levels but in the end came off a bit. It finally settled the day at 7601.35, posting a net gain of 33.05 points or 0.44% while forming a lower top but higher bottom on the Daily Bar Charts.

MARKET TREND FOR MONDAY, JANUARY 11, 2016

The Markets have witness a reluctant and mild pullback on lower volumes on Friday. Today, we are poised at a critical juncture wherein we are placed with two distinctly possibilities. Today’s opening is slated to be on a lower note and there are all chances that the Markets will test its 52-Week lows and might even breach that. Today, if we see a opening below the levels of 7540, then this level is likely to remain resistance for the rest of the day. However, if we see it opening on or around this level, we may expect the Markets to show some resilience going ahead in the session.

For today, the levels of 7630 and 7655 will remain immediate resistance for the Markets. The supports come in at 7540 and 7475 levels.

The RSI—Relative Strength Index on the Daily Chart is 36.8363 and this remains neutral as it shows no bullish or bearish divergence or any failure swings. The Daily MACD stands bearish as it trades below its signal line. On the Weekly Charts, RSI is 40.2140 and it does not show any failure swing. However, the NIFTY has set a fresh 14-period low while Weekly RSI has not and therefore it is Bullish Divergence on Weekly Charts. Weekly MACD stays bearish as it trades below its signal line.

On the derivative front, the NIFTY January futures have added 36,375 shares in Open Interest. This remains a very negligible addition and we can fairly consider that OI has stands unchanged leaving much of the short positions open in the Markets.

Coming to pattern analysis, the Markets have taken a faint support at the triple bottom formation on the Daily Chart. This support levels happens to be the 52-Week lows of 7540 and the Markets have taken support thrice from the month of September till date. Today’s opening is likely to remain very crucial. Opening on or around 7540 and  managing to stay above it will see the Markets remaining resilient to the overall global weakness in the immediate short term. The European Markets too are now “oversold” on Daily Charts and they might also witness some technical pullback as well. Owing to this, the chances of our Markets showing resilience below 7540 levels remains possible. However, any breach below 7540 will see some more weakness creeping into the Markets.

All and all, owing to the given scenario described above, the levels of 7540 and the behavior of the Markets vis-à-vis this level will be important to watch out for. It would be critically important for the Markets to try and keep its head above 7540 and do now show any significant breach to avoid further weakness. It is advised to refrain from making aggressive purchases and maintain adequate liquidity while adopting highly cautious outlook on the Markets.

Milan Vaishnav,
Consulting Technical Analyst

Af. Member: Market Technicians Association, (MTA), USA
Af. 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

Daily Market Trend Guide -- Friday, January 08, 2016

MARKET REPORT                                                                                     January 08, 2016

Getting mercilessly affected by weak global cues, NIFTY too ended the day with a deep cut after opening with a gap down. The Markets experienced Chinese jitters along with its Asian peers and opened on with a gap down. The Markets opened precisely at the important pattern support and immediately slipped below it. For the rest of the session, that pattern support levels remained resistance as the Markets reported day’s high of 7674.95. The Markets remained under constant pressure throughout the session. At no point did the Markets showed any inclination to take support or rebound. It remained in downward falling trajectory for the entire day and formed the day’s low of 7556.60, nearly testing its 52-day low again. It finally settled the day at 7568.30, posting a net loss of 172.70 points or 2.23% while forming a sharply lower top and lower bottom on the Daily Bar Charts.

MARKET TREND FOR FRIDAY, JANUARY 08, 2016

The Markets are poised at a very critical juncture. Today, we can expect a quiet opening in the Markets and also a mild technical pullback cannot be ruled out. However, at the same time, it is also important to note that the Markets nearly tested its 52-low support yesterday by trading just a whisker away from those levels. This level is a all important triple bottom support and any breach of these levels will induce weakness in the Markets.

For today, the levels of 7620 and 7645 are immediate resistance levels for the Markets. Supports come in at 7540 and 7420 levels.

The RSI—Relative Strength Index on the Daily Chart is 34.2071 and it has reached its lowest value in last 14-days which is bearish. It does not show any bullish or bearish divergence. The Daily MACD is bearish as it trades below its signal line. On the Candles, A falling window occurred (where the bottom of the previous shadow is above the top of the current shadow).  This usually implies a continuation of a bearish trend.  There have been 5 falling windows in the last 50 candles--this makes the current falling window even more bearish.  The two candles preceding the falling window were black, which makes this pattern even more bearish. Three black candles occurred in the last three days.  Although these candles were not big enough to create three black crows, the steady downward pattern is bearish.

On the derivative front, the NIFTY January series have added over 7.60 lakh shares or 3.65% in Open Interest. The NIFTY PCR stands at 0.85 as against 0.84 yesterday.

While coming to pattern analysis, the Markets formed yesterday’s low point very near to the 52-week lows of 7540 levels. It nearly tested these levels and thereby has taken support at a triple bottom formation. This is one of the major pattern supports for the Markets. Any breach below these levels will cause some good amount of weakness to creep in the immediate short term.  Though we can expect a flat opening today, it would be very important for the Markets to trade above 7540 levels.

All and all, though we can expect a flat opening in the Markets and even some amount of technical pullback, the Markets are not completely out of the woods. The protection of levels of 7540 will be of critical importance for the Markets.  It is advised to refrain from creating any fresh positions even in event of a mild technical pullback. Overall, continuance of cautious outlook is advised for today.

Milan Vaishnav,
Consulting Technical Analyst

Af. Member: Market Technicians Association, (MTA), USA
Af. 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