MARKET TREND FOR FRIDAY, OCTOBER 21,
2016
Domestic Equity Markets showed good amount
of resilience near the resistance levels of 8690-8710 zones as it resisted to
these levels throughout the day yesterday while it ended the day with modest
gains. Today, we will continue to see the NIFTY trading with resilience with
somewhat positive bias and the levels of 8690-8710 will remain important to
watch out for. There are chances that the NIFTY will attempt to resume its up
move if it manages to move past 8750 levels. This chances of this happening
remain relatively high given the pattern of the lead indicators.
For today, the levels of 8710 and 8755 will
act as immediate resistance levels. The supports come in at 8655 and 8625
levels.
The RSI—Relative Strength Index on the
Daily Chart is 50.7563 and it remains neutral as it shows no bullish or bearish
divergence or any failure swings. The Daily MACD remains bearish as it trades
below its signal line. However, it is likely that it reports a positive
crossover if the Markets do not weaken and if it consolidates in coming days.
On the derivative front, the NIFTY October
futures have added over 6.45 lakh shares or 3.59% in Open Interest. This throw
a significant input which suggests that unwinding has stopped and so has short
covering and fresh longs are seen being built in the system.
Coming to pattern analysis, it still
remains evident that the NIFTY now remains in the falling channel drawn from
8968 levels. Though it continues to remain in this channel, it faces resistance
at 8709, which is the 50-DMA level and then at 8755 which is the falling trend
line pattern resistance for the NIFTY. If the NIFTY manages to move past the
8755 level in coming days, we will witness fresh resumption in the up move.
However, until that happens, range bound oscillation of the NIFTY will continue
with volatility remaining ingrained in it.
All and all, though the 50-DMA levels might
resist at Close levels, the lead indicators and the F&O data show the bias
shifting to positive. Even if the NIFTY consolidates, it seems that the downside
may be range bound and we might see the NIFTY attempting resumption of up move
if it manages to move past 8750-8760 zones. Until this happens, though profits
be vigilantly protected at higher levels, very selective purchases too should
be made keeping in view the imminent chances of stock specific out-performance.
Milan Vaishnav, CMT
Technical Analyst
(Research
Analyst, SEBI Reg. No. INH000003341)
Member:
Market Technicians Association, (MTA), USA
Canadian Society of Technical Analysts, (CSTA), CANADA
Association of Technical Market Analysts, (ATMA), INDIA
http://milan-vaishnav.blogspot.com
+91-98250-16331
