MARKET TREND FOR FRIDAY, JULY 15,
2016
Global liquidity continued to fuel the
Markets as after initial consolidation on a lower note, the Markets continued
with its up move to end the day with modest gains. Today, speaking purely on
technical grounds, the Markets are expected to continue with its up move, at
least in the initial trade. Today, we can expect a quiet to modestly positive
opening in the Markets once again. The Markets are likely to test its logical
target levels of 8600-8610 as we had analyzed in one of our previous editions.
However, given the pattern analysis, it would be critically important to see
the behavior of the Markets at 8600-8625 zones.
For today, the levels of 8600 and 8625 will
act as immediate resistance levels for the Markets. The supports come in lower
at 8505 and 8460 levels.
The RSI—Relative Strength Index on the
Daily Chart is 72.4695 and it has reached its highest level in 14-days which is
bullish. However, it trades in “overbought” zone and it does not show any
bullish or bearish divergence. The Daily MACD is bullish as it trades above its
signal line. On the Candles, an engulfing bullish candle has occurred.
Since this has occurred at the high point and after a good up move, this can
act as a potential short term top for the Markets.
On the derivative front, the NIFTY July
futures have went on to add yet another over 6.24 lakh shares or 2.91% in Open
Interest. The NIFTY PCR stands at 1.08 as against 1.04 yesterday.
Coming to pattern analysis, the Markets
have been rising sternly within the rising channel drawn from February lows.
Post achieving breakout over 8295 and after couple of days of consolidation in
between, the Markets have continued to display great inherent buoyancy. Having
said this, as we had mentioned couple of times in our previous editions, the
logical targets of this can be anywhere in the range of 8600-8625 levels. At
these levels, the Markets would touch / test its logical pattern resistance
levels. It would be important to see the behavior of the Markets at these
levels.
Overall, today’s opening levels are
expected to see the Markets being very near to its first pattern resistance
levels of 8600. The Markets are “overbought” and they tend to remain overbought
for some time in buoyant times. The current rally is being fuelled by global
liquidity which has happened because of a tactical shift to equities happening
after sharp decline in bond yields. However, all this certainly make the
Markets buoyant but does continue to keep it vulnerable to sharp intraday selling
/ corrective bouts at higher levels. Though overall buoyancy is evident, some consolidation
at higher levels cannot be ruled out.
Milan
Vaishnav, CMT
Technical Analyst
Member: Market
Technicians Association, (MTA), USA
Member:
Association of Technical Market Analysts, (ATMA), INDIA
+91-98250-16331
