MARKET TREND FOR TODAY
The Markets continued with its yet another gap down opening yesterday as it opened lower, recovered almost all of its losses and pared some of those again to end yet another day with losses forming a lower top and lower bottom on the Daily High Low Charts.
Today also, expect a gap down opening in the Markets again following weak closing of US Markets and resultant weakness in the Asian Markets. Thus, it is certain that we shall a gain see a gap down opening today with the Markets expected to open lower significantly and then again attempt a recovery from its opening lows. With the gap down opening expected the levels of 5020 and 5980 are expected to act as supports on the lower side.
At this juncture, it is important to note that looking at gravity of the developments, the Markets tend to behave completely defying the technicals. However, the technicals do play important role as it certainly offers resistance to weakness as it tried to do yesterday.
All lead indicatory indicate markets to be in extremely OVERSOLD territory. The RSI—Relative Strength Index on the Daily Chart is 26.0311 and it does not show any negative divergence and trades in OVERSOLD zone. The Daily MACD, though it trades below its signal line, is moving towards being OVERSOLD.
The Markets have shown addition of Open Interest in NIFTY indicating creation of short positions. Also, with the Markets going heavily into OVERSOLD zone, it is all likely to offer resilience and resistance once it opens lows and MAY NOT GO BEYOND ITS OPENING LOWS.
All and all, looking at the OVERSOLD state of the Markets, a technical pullback is almost imminent and it is all likely that the Markets recovers from its initial lows again. THE BEST POSSIBLE THING ONCE CAN TO IS TO PATIENTLY SIT THROUGH THIS EXTERNAL DEVELOPMENT. IT IS BEST ADVISED TO AVOID ANY EXCESS POSITIONS AND MAINTAIN LIQUIDTY PROTECT THE CURRENT HOLDINGS WITHOUT PANIC.
Milan Vaishnav,
Consulting Technical Analyst,
+91-9825016331
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