Wednesday, April 6, 2011

Daily Market Trend Guide -- Wednesday, April 06, 2011

MARKET TREND FOR TODAY


The Markets yesterday saw some signs of profit taking and correction setting in but that remained intraday as the Markets recovered from its lows to end the day flat and in the process have formed a almost parallel bar with slightly higher top and higher bottom on the Daily High Low charts.

For today, expect the Markets to open on a flat to moderately positive note again and look for directions.

With the Markets expected to open flat to moderately positive, the levels of 5925 and 5940 shall continue to act as resistance. We had categorically mentioned the levels of 5925 acting as Pattern Resistance and the Markets resisted there yesterday and made a high of 5928.65. This range, i.e. 5925-5935 shall continue to remain and act as resistance until this is significantly breached on the upside.

The RSI—Relative Strength Index on the Daily Chart is 71.0859 and it has reached its highest level in 14-days. But at the same time, it is  in OVERBOUGHT territory. The Daily MACD continues to trade above its signal line. On Candles,
A long lower shadow occurred but it is irrelevant as it has occurred during a rally.

The Markets have failed to breach the levels of 5925-5935 as mentioned and any sustainable up move shall come only if the Markets move past and sustain and trade above those levels. With the RSI  OVERBOUGHT, the sustenance above the resistance levels is technically unlikely. Therefore, any blatant longs either in NIFTY or NIFTY Components may prove risky as it has total adverse risk reward ratio. The Markets badly needs to either correct or at least consolidate before any further up move as such up moves are definitely getting unhealthier for investors as such sharp up moves see equally sharp corrections. It is thus advised to remain ultra stock specific in purchases and maintain highly cautious outlook for the day.

Milan Vaishnav,
Consulting Technical Analyst,
www.MyMoneyPlant.co.in 
+91-9825016331

milanvaishnav@mymoneyplant.co.in 
milanvaishnav@yahoo.com

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