Daily Market Trend Guide -- Friday, October 21, 2011 (Published in the morning before the Markets opened)

MARKET TREND FOR TODAY

The Markets had a terribly volatile session yesterday as it ended the day with relatively moderate losses after opening weak, dipping further and thereafter recovering from its day’s lows.  However, it still formed a lower top and lower bottom on the Daily High Low charts.

Technically speaking, even though the Markets have ended the day with losses, it has closed near the high point of the day and it is usually expected to continue with its recovery.

For today, expect the Markets to open on a moderately positive note and look for directions. Today, the intraday trajectory that the Markets form would be critically important as some stability is again expected to return in the markets. This will be due to some favorable technicals and also as the US Markets too recovered from its day’s low and Asian Markets are trading stable.

For today, the levels of 5145 and 5170 continue to act as resistance levels and the levels of 5050 and 5005 are expected to act as supports.

The RSI—Relative Strength Index on the Daily Chart is 54.0067 and it shows no negative divergence or failure swing and is therefore neutral.

The Daily MACD continued to trade above its signal line and is therefore bullish.

Though NIFTY has shedding Open Interest in current series, two important things to observed that we have been witnessing short covering near the 50DMA levels. This shows discomfort near those levels for further downside. Also, since the Markets are currently trading above its 50 DMA it can certainly be said that it is now attempting a reversal of trend and thus has an upside bias.

All and all, moderately positive opening and stability is expected in the Markets today. Stock specific activity and some amount of rollovers are expected to begin and seen. While protecting profits and avoiding shorts, overall, positively cautious approach is advised for today.

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