MARKET TREND FOR FRIDAY, JUNE 03,
2016
The Markets displayed excellent strength as
after five days of straight gains and just two days of consolidation, it went
on to add yet another day of gains. Today, the Markets are once again expected
to open on a positive note and look for further gains. Speaking purely on
technical grounds, the Markets are tracking the rising trend line drawn and
with each passing day, the pattern resistance levels also keep rising. Given this structure, likely levels of
8280-8300 on the Markets cannot be ruled out.
For today, the levels of 8265 and 8300 will
act as immediate resistance levels for today. The supports come in at 8180 and
8150 levels.
The RSI—Relative Strength Index on the
Daily Chart is 70.7186 and it now trades at overbought levels above 70. Though
it does not show any bullish or bearish divergence, it has reached its highest
value in last 14-days which is bullish. The Daily MACD stays bullish as it
trades above its signal line.
On the derivative front, the NIFTY June
futures have 20,250 shares or 0.09% in Open Interest. The change in OI remains negligible
and overall build up continue to remain on the long side.
Coming to pattern analysis, the Markets
broke out from a month-long consolidation formation after taking support at
200-DMA for couple of times and after breaking out on the upside, the Markets
posted some 450-odd points of gains. After consolidating for just two days, the
Markets have attempted to further its gains again and the next logical levels
that the Markets can test are 8280-8300. However, given the overbought nature
of the Markets, some amount of resistance cannot be ruled out from higher
levels.
Overall, the inherent bias of the Markets
continue to remain strong and on upside. However, some caution will have to be
exercised given the overbought nature of the Markets. Again, given the inherent
bullish undertone, shorts should be strictly avoided. While selective purchases
may be made, any levels of above of 8250 should be utilized to book and protect
profits.
Milan Vaishnav,
Consulting Technical Analyst
Member: Market
Technicians Association, (MTA), USA
Member: Association of Technical
Market Analysts, (ATMA), INDIA
+91-98250-16331
