Daily Market Trend Guide -- Monday, June 27, 2011

MARKET TREND FOR TODAY

As very clearly advised in our edition dated June 21st, the NIFTY recovered over 282 points from its day’s low made on the day which Markets reacted to DTAA treaty developments. On Friday, the Markets gave one of the major expected pullbacks and closed the day with robust gains and in the process have formed a sharply higher top and higher bottom on the Daily High Low Charts.

For today, expected the Markets to give a subdued and quiet start and is expected to consolidate a bit after Friday’s up move. With the Markets expected to open on a quiet and negative note following global weakness persisting, there are chances that the cuts may be limited and we once again continue to consolidate and trade in a range with the levels of 5500 and 5540 acting as resistance and the support coming in 5350.

Having said this, there appears a contradiction on the Charts if the lead indicators are read  and the Chart Pattern Analysis is done. The RSI—Relative Strength Index on the Daily Chart is 52.0313 and it has reached the highest value in last 14-days which is Bullish. Also, RSI has set a new 14-day high where as NIFTY has not yet, which is Bullish Divergence. The Daily MACD, however, continues to bearish as it continues to trade below its signal line. On the Weekly Charts too the Weekly MACD continues to trade below its signal line and the RSI remains neutral as it shows no negative divergence or failure swings.

As per Chart Pattern Analysis on the Daily Charts, the 50-DMA and 100-DMA may give a negative crossover. Further, even with the pullback, we are still in overall falling channel with the immediate resistance coming in at 5500 and 5340 levels. All and all, this will all end up keeping the Markets slightly consolidating or mildly correcting and again thus, the Markets are likely to trade in a range. With slightly negative opening expected today, it would be essential for the Markets to move past 5475 to continue with its up move and intraday trajectory would be critical. Cautious, stock specific approach is advised for today.

Milan Vaishnav,
Consulting Technical Analyst,
www.MyMoneyPlant.co.in
+91-9825016331
milanvaishnav@mymoneyplant.co.in
milanvaishnav@yahoo.com