Monday, August 29, 2011

Daily Market Trend Guide -- Monday, August 29, 2011 (Published in the morning before the Markets opened)


The Markets on Friday, despite being Oversold, went on to kneel under pressure seeing heavy caution before Fed Announcements later that day went on to end with further losses and ended the day forming a lower top and lower bottom on the Daily High Low Charts.

Today, the Markets are likely to open on a positive note and we can expect to see a relief rally post Friday’s developments.

For today, we can expect the Markets to open on a positive note and trade into positive and possibly further strengthen, depending largely on the intraday trajectory that it shall form. For today, the levels of 4780 and 4825 are expected to act as resistance and the levels of 4720 and 4690 are likely to act as supports. All lead indicators continue to remain OVERSOLD on both Daily and Weekly basis.

The RSI—Relative Strength Index on the Daily Chart is 24.6443 and it does not show any failure swing and it is grossly OVERSOLD. NIFTY has made a new 14-day low but RSI has not and this is BULLISH Divergence. The Daily MACD Continues to trade below its trigger line.

On the Weekly Charts too, the RSI stands OVERSOLD at 28.0317. The Weekly MACD continues to trade below its signal line and that too is in OVERSOLD range.

Further to this, the NIFTY is trading near its Crucial Double Bottom Support on both Daily and Weekly Charts.

Keeping the above technicals factors in view, we can fairly expect a relief rally and stability to return to the markets as the Fed announcements has remained a non-event. Also, FIIs have remained net buyers in both Cash and F&O Segments.

All and all, the Markets are grossly OVERSOLD and with no negative triggers today, we can expect a relief rally to begin and sustain subject to positive intraday trajectory and Volumes. Stock specific activities would be seen. Positive outlook is advised for today.

Milan Vaishnav,
Consulting Technical Analyst,