Daily Market Trend Guide -- One of India's most accurate and highly acclaimed Daily Market Trend Guide which brings an in-depth technical analysis of Indian Equity Markets every morning before the Market Opens in your mailbox. Gemstone Equity Research & Advisory Services offer Premium and PERSONALIZED Stock Market Advice.
The Market yesterday saw a spate of short covering after trading in a capped range and ended with strong gains and in the process have formed sharply higher top and Daily High Low Charts.
Today,since the markets have closed near the high point ofthe day, it is expected to open on a positive note again and trade in positive at least in the initial trade.
However, today, the intraday trajectory that the Markets form after opening would be critically important for today’s trend.
With the Markets expected to open on a positive note, the levels of 5872 and 5880 shall act as resistance and the levels of 5800 and 5725 shall act as supports.
The RSI-Relative Strength Index on the Daily Chart is 58.2253 and is neutral as it shows no negative divergence or failure swings.
The Daily MACD continues to remain Bearish as it trades below its signal line.
Yesterday’s rise is the Marketsis evidently because of short covering as the over all Open Interest has reported fall from its intraday high in both stock and NIFTY Futures. Further as described in the first half, the F&O Data also suggests short covering.
Further, there is a falling trend line drawn from the life time highs of 6135, which resists today at 5872-5880. Thus, the Markets, if order to sustain at higher levels, will have to move past this. This is a chart pattern resistance and the Markets are likely to resist at this levels. There are all chances that inspite of positive opening, the Markets may transform themselves into negative trajectory after touching these levels.
All and all, no sustainable up move would be there until the Markets moves past this pattern resistance and then 5944. Until this happens, it is advised to maintain a cautious outlook as the markets may turn weak from higher levels.
The Markets yesterday moved quite volatile but in a range and finally ended with marginal gains and in the process have still continued to form sharply lower top and lower bottom on the Daily High Low Charts.
Taking cue from the positive global markets, the markets today are likely to see positive opening and trade in positive, at least in the initial trade.
With positive opening expected today, the levels of 5760 and 5785 are likely to act as resistance and the levels of 5729 and 5702 are likely to act as supports in form of 200 and 100 DMA at Close.
Yesterday, the Markets breached its 200-DMA levels but took support near its 100-
DMA and have managed to close marginally above both of that averages.
The RSI—Relative Strength Index on the Daily Charts is 52.1234 and shows no negative divergences or failure swings and is therefore neutral. The Daily MACD continues to remain bearish as it trades below its signal line.
After two days of sharp fall, yesterday’s marginal gains cannot be called a pullback and the Markets have formed a sharply lower top on Daily High Low Charts. Also, the two averages, i.e. 100–DMA and 200 DMA have continue to widen its negative divergence. Further Net Reduction is reported in over all NIFTY and Stock Futures. Thus, even with the positive opening, the intraday trajectory would be equally and critically important and given the chart pattern analysis read along with F&O data, the overall bias still remains on the correction continuing, though it may take a breather for a day. Any dip below the 5729-5702 shall make the Markets weaker. All and all, as advised in previous days, very selective stock specific approach with protection of profits at higher levels is advised. Outlook with high degree of Caution, especially towards Close is advised for today.
The Markets resisted the mentioned resistance levels of 5900 as it could not sustain at higher levels after buoyant opening and dipped to itslows to end the day with losses and in the process have formed a lower top and sharply lower bottom on the Daily High Low Charts.
Today, again, technically speaking, the Markets are expected to open on a negative note as they have closed near the low point of the day and trade negative at least in the initial trade.
For today, thus, expect the Markets to open negative and the levels of 5550 and 5595 shall act as resistance on the upper side whereas the levels of 5726, 5704 are expected to act as support on Close levels in form of 200-DMA and 100-DMA respectively. Below this the support exists at 5610.
The RSI—Relative Strength Index on Daily Chart is 51.3948 and has reached its lowest value in last 14-days which is BEARISH. It continues to set new 14-period low while nifty has not and this again is BEARISH DIVERGENCE.
The Daily MACD has given a sell signal as it has just dipped below its signal line.
Today’s session and its trend in coming days is very critically depend upon the Markets opening and trading above 5704-5725 levels. The Markets WILL have to trade and sustain above this levels if it is to avoid any further weakness. With total NIFTY open interest and Stock futures reporting net shedding, this will be a difficult task. However, a bout of short covering as seen in the morningyesterday also cannot be ruled out.
All and all, market behavior vis-à-vis the mentioned levels critically important. Though some short covering may be seen, bias still remains on downside. With the Markets opening lower, it will see further weakness if dips below 5705 levels. Cautious outlook is advised to be continued today.
MARKET TREND FOR TODAY
The markets continued with its correction, precisely as analyzed in our Friday’s edition of Daily Market Trend Guide as it ended the day with losses and in the process have formed a lower top but higher bottom on the Daily High Low Charts.
The Markets have closed near the low point of the day, and technically speaking, it is technically suppose to open in the negative and continue with the correction.
However, since global markets are stable to positive, we may see flat to mildly positive opening in the Markets. With the Markets expected to open on a flat to mildly positive note, the levels of 5900 and 5925 shall continue to act as resistance and the levels of 5724 and 5707 shall act as supports.
The RSI—Relative Strength Index on the Daily Chart is 58.2198 and it is reached its lowest value in last 15 days, which is BEARISH. Also, RSI has set a new 14-day low where as NIFTY has not yet. This is BEARISH DIVERGENCE. The Daily MACD continues to trade above its signal line but is getting weaker with every session and is likely to give a sell signal.
On the Weekly Charts, the RSI at 54.9229 is neutral without any failure swing and negative divergence. However, on the Candles A Spinning Top has occurred and it is typically bearish if it occurs after rally which signifies a potential weekly top formation.
Apart from this, the NIFTY has added Open Interest on the short side and significant put writing is observed at critical levels. With the FIIs remaining net sellers on Friday, the levels mentioned here shall continue to act as resistance and short term weakness is likely to be seen with potential support coming it as 5724 and 5707 levels which are 200 and 100 DMAs respectively. Until this happens, longs should be taken very selectively. Even if minor short covering is seen, very cautious outlook is advised for today.