Wednesday, April 4, 2012

Daily Market Trend Guide -- Wednesday, April 04, 2012

MARKET TREND FOR TODAY                                                        April 4, 2012
Positive consolidation continued yesterday also as the Markets ended the day with gains despite  range bound and volatile session.  The Markets opened positive and remained positive for the entire session. The Markets remained in 25-odd points range in the entire morning trade but went on to give the intraday high of 5378.75. It saw some sudden paring of gains towards second half of the session but again recovered to finally end the day at 5358.50, still posting a decent gain of 40.60 points or 0.76%. It has formed a sharply higher top and higher bottom on the Daily High Low Charts.

Today, expect the Markets to take some breather and consolidate around these levels as it has approached its important pattern resistance of 5400-5420. We are likely to see a moderately negative start today and the Markets shall look for directions continuing to heavily depend upon the intraday trajectory.

Technical speaking, the Markets have created a gap between 5331 and 5344 (yesterday’s low and the day before yesterday’s high) and it might fill up that cap in a mild consolidation /correction. For today, the levels 5400-5420 shall continue to act as major pattern resistance and the levels of 5330 and 5280 shall act as supports. The level of 5324 shall be a important support in form of 50-DMA at  Close .

The RSI—Relative Strength Index on the Daily Chart is 54.2934 and it has reached its highest value in last 14-days which is BULLISH. Also, the RSI has given a new 14-day high whereas the NIFTY has not yet and this is BULLISH DIVERGENCE. The Daily MACD too has reported a Bullish Crossover as it now trades above its signal line. 

NIFTY futures have shown a nominal decrease of 0.58% in Open Interest. Stock futures have continue to add net open interest. Further to this, the strength in the lead indicators  strongly suggest that any weakness that we might see should be temporary and the overall trend and undercurrent remains bullish.
Having said this, today is the last trading day of this short week with Tomorrow and Friday would be trading holiday on account of Mahavir Jayanti and Good Friday respectively. Due to only this factor we may see some sluggish behaviour in the Markets due to holiday ahead otherwise, as said earlier, undercurrent remains bullish.

All and all, stock specific action is advised. It is advised to refrain from shorts and also refrain from aggressive positions overall. The Markets may consolidate until they move past 5400-5420 levels and fresh sustainable up move is  expected beyond this. Until this happens, we expect the Markets to consolidate in a range bound and little volatile manner. Overall, cautious optimism is advised for today.

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

milanvaishnav@yahoo.com 

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