Daily Market Trend Guide -- Tuesday, June 28, 2011

MARKET TREND FOR TODAY

The Markets continued with its up move yesterday to close with decent gains even though it traded in a capped range after initial up move and in the process have continued to form a higher top and higher bottom on the Daily High Low Charts.

Today, expect the Markets to open on a positive note and continue with its up move at least in the initial trade. With the Markets expected to open on a positive note, the levels of 5540 and 5560 shall continue to act as resistance and the levels of 5480 and 5455 shall act as supports.

The Markets have resisted at the 50-DMA and 100-DMA and have closed a notch below that and these levels are likely to continue to act as resistance ant Close levels.

All lead indicators continue to remain in place. The RSI—Relative Strength Index on the Daily Chart is 56.0964 and it has reached its highest value in last 14-days, which is bullish. Also, the RSI has set a new 14-period high but the NIFTY has not which is bullish divergence.

The Daily MACD has just managed to cross above its signal line and it now trade above that.

Having said this, the Chart Pattern Analysis  comes into play. The Daily Moving Averages, i.e. the 50-DMA and the 100-DMA has reported a negative crossover as the 50-DMA has cut the 100-DMA from above which is bearish in the short term and may bring in short term weakness. Apart from this, the DIIs have remained net sellers and FIIs have been seen short covering heavily in the derivative segments.

Overall, the Markets are definitely likely to resist at the 50 and 100 DMAs at 5540 levels at close. Also, since the Markets have risen over 5% in last five sessions, it needs to consolidate and mildly correct. It is advised to take long positions only on highly selective basis and keep protecting long profits at higher levels and long positions may be avoided in index components. There are chances that the Markets opens positive but then consolidates. Cautious approach is advised for today.

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