Daily Market Trend Guide -- Wednesday, August 24, 2011

MARKET TREND FOR TODAY

The Markets saw continuation o pullback as it closed the day with yet another modest gains. However, the session remained bit volatile initially. Both the expiry week as well as some lack of conviction and volumes were visible but still the Markets managed to form a higher top and higher bottom on the Daily High Low Charts.

For today, expect a subdued opening in the Markets. Thus, with subdued or mildly negative opening expected, again, like yesterday, the intraday trajectory and the levels of participation (volumes) will continue to plan critical role in deciding the trend for today, though bias definitely remains on the upside.

With mildly negative opening expected, the levels of 4970 and 5010 shall act as resistance on the upside and the levels of 4915 and 4880 shall act as supports.

The RSI—Relative Strength Index on the Daily Chart is 31.7627 and it is neutral as it shows no negative divergence or failure swings. It has crossed above from a bottoming formation and this is a Bullish sign. The Daily MACD continues to trade below its signal line.

Having said this, the behavior of the Markets vis-à-vis the levels of 4967-4970 would be important. As per pattern analysis, this level was one of the double bottom support drawn from June 2010 levels which the Markets broke. This is likely now to act as resistance. It would be important for the Markets if it opens subdued to move past this levels and sustain above that. Until this happens, it is likely to consolidate around this levels without any significant direction in a volatile manner.

All and all, the Markets are attempting a pullback and have formed a potential bottom. However, it has been lacking in conviction due to lack of volumes. Until the Markets moves past the levels mentioned, very stock specific approach should be adopted. Session shall also remain dominated with rollover activities  as we enter the penultimate day of expiry. Positive caution advised for today.

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