Daily Market Trend Guide -- Wednesday, June 01, 2011

 MARKET TREND FOR TODAY

After briefly reacting to the GDP growth numbers which came in lower than expected, the Markets staged a smart rally in the second half of the session to closed with robust gains and in the process have continued to form a higher top and higher bottom on the Daily High Low Charts.

Technically speaking, with the Markets closing at the high point of the day, it is likely to open in the positive and continue its up move, at least in the initial trade.

Thus, today, expect the Markets to open on a positive note and look for upward directions and will continue to remain dominated with the intraday trajectory that it forms.  All lead indicators in the Markets continue to remain in place. The RSI—Relative Strength Index on the Daily Chart is 52.3944 and it does not show any negative divergence. It however has reached its highest value in last 14-days and it is thus BULLISH. The Daily MACD continues to remain positive as it trades above its signal line.

Also, with yesterday’s rise, the Open Interest has increased signifying that apart from short covering, also some fresh longs have been initiated which is a positive sign. The FIIs and DIIs have remained net buyers.

However, the levels of 5591 and the levels of 5635 may act as resistance at Close levels in form of 100 DMA and 50 DMA respectively. Also, there is a pattern resistance in form of a Double Top at 5605 levels. Thus, there are chances that after seeing a rise of 243 points from its lows the Markets may consolidate in the range of 5590-5635 levels and fresh up move can occur above 5635 levels. All and all, consolidation likely in the Markets. Any move past 5635 levels will bring in fresh rally and until then the consolidation is expected in a range. However, bias remains on the upside. Positive outlook is advised for today.

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