Thursday, January 12, 2012

Daily Market Trend Guide -- Thursday, January 12, 2012


MARKET TREND FOR TODAY                                                        January 12, 2012
After a breakout above 4800 levels, the Markets consolidated yesterday again with the levels 50-DMA acting as immediate resistance as the Markets spent a range bound session and ended the day with nominal gains. The Markets opened on positive note on expected lines and spent the entire session trading in a capped range. The Markets gave its intraday high of 4877.20, against the expected resistance at 4876. It however ended the day at 4860.95, posting a nominal gain of 11.40 points or 0.24%. In the process, it has formed a higher top and higher bottom on the Daily High Low Charts.

Today, expect the Markets to open on a mildly positive to flat note and look for directions. The Markets are expected to continue to consolidate as it has resisted to its 50-DMA yesterday and today, it is again likely to do so. For today, the levels of 4867, which is the 50-DMA and the levels of 4940, which is the 100-DMA of the Markets shall act as resistance with the levels of 4790-4800 acting as supports.

The lead indicators continue to remain in place. The RSI—Relative Strength Index on the Daily Chart is 57.1108 and it shows no negative divergence. It has reached its highest value in last 14-days which is bullish. The Daily MACD is bullish as it continues to trade above its signal line.

On the Candles, A spinning top occurred (a spinning top is a candle with a small real body).  Spinning tops identify a session in which there is little price action (as defined by the difference between the open and the close).  During a rally or near new highs, a spinning top can be a sign that prices are losing momentum.
Also important to note that INFOSYS is declaring the numbers, and thus with it enjoying over 10% weight in the NIFTY, it can significantly keep it volatile. More important would be the IIP Numbers which would be announced and Markets are expected to react to this.

All and all, the combination of above technical factors read along with expected news flow like IIP, the consolidation is expected to continue and it is advised to avoid taking aggressive positions on either side while continuing to protect profits as we have been doing since last several sessions. Overall, cautious outlook is advised for today.

Milan Vaishnav,
Consulting Technical Analyst,
+91-98250-16331


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