Daily Market Trend Guide -- Wednesday, July 27, 2011

MARKET TREND FOR TODAY

The Markets took a rude shock yesterday following  RBI’s announcement of hiking Repo and Reverse Repo Rate by 50 bps against widely expected 25 bps as it came off over 120 points from its day’s high to ended the day with significant losses, forming a similar top and lower bottom on the Daily High Low Charts.

Today, the Markets will see a flat opening followed by a direction-less trade in the initial session. Though some minor pullbacks may be see, the trend would critically and largely depend upon the intraday trajectory it forms.

With the flat opening expected in the Markets the levels of 5600 and 5640 shall act as resistance and the levels of  5712 and 5480 are likely to act as supports. The Markets have closed a notch below its 100-DMA levels of 5581.29.

The RSI—Relative Strength Index on the Daily Chart is 50.0596 and is neutral as it shows no negative divergence or a failure swing.

The Daily MACD has again turned bearish reporting negative crossover making it trade below its signal  line.

On the Candles, a big black candle has occurred. With the current formation, it has lent credibility to the resistance area from where the Markets reacted.

The Markets have reacted twice to its 200-DMA levels, currently at 5712 and this has now become a temporary top. The fresh up move shall occur only after the Markets moves past these levels. Further to this, the Markets have closed a notch below its 100-DMA. Any breach is likely to take it to its 50-DMA of 5712, with another support coming in at 5480. The NIFTY and Stock Futures have shown net decrease from total open interest which takes the bias towards temporary weakness.

Even if some technical pullback is seen, it is expected to be limited in range with some amount of volatility ingrained in it.  It is strongly advised to continue with very cautious outlook and stock specific approach for the day. 

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