Daily Market Trend Guide -- Monday, October 17, 2011 (Published in the morning before the Markets opened)

MARKET TREND FOR TODAY

After spending the half of the session trading flat and consolidating, the Markets perked up in the second half of the session on moderate volumes and ended the day with gains an in the process have formed a Parallel Bar, which slightly higher top and bottom on the Daily High Low charts.

Today’s session would be crucial as the Markets approaches one of its important resistance levels today, i.e. the upper range of the broad trading range it has been trading in.

For today, expect the Markets to open on a moderately positive note and trade in the positive at least in the initial trade. The Markets are expected to open around 5170-5175 levels and it would be critically important to observe the behavior of the Markets around those levels.

For today, the levels of 5170 and 5190 are expected to act as resistance the levels of 5110 and 5075 are immediate supports.

The RSI—Relative Strength Index on the Daily Chart is 57.6720 and it has reached its highest value in last 14-days which is bullish. It does not show any divergence. The Daily MACD continues to trade above its signal line. On the Candles, an Engulfing Bullish Pattern has occurred and with current formation, it may be last engulfing top which indicates a top. However, this requires confirmation today.

Having said this, and taking into consideration the Candles, it is important to note that 5170-5175 is the upper range of broad rectangle the Markets have been trading in since August. Thus, it would be extremely important to see the behavior of the Markets vis-à-vis this level. There are fair chances that it consolidates post opening forming a sideward or falling trajectory and this may bring in some amount of volatility in the markets. It is important to observe around these levels and very selective stock specific approach is advised. It is also strongly advised to protect the profits vigilantly around these levels. Cautious outlook is advised for today.

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