Wednesday, May 16, 2012

Daily Market Trend Guide -- Wednesday, May 16, 2012

MARKET TREND FOR TODAY                                                            May 16, 2012
The Markets snapped its 5-day losing streak as it opened moderately low, improved as the session went ahead and finally ended the day with modest gains, quite on expected lines. The Markets opened on a moderately negative note  and traded in a capped range in the morning trade. It however, came into the positive territory and while remaining in upward rising trajectory, went on to give the day’s high of 4955.20 in the afternoon session. The Markets came off a bit from those levels but recovered again to finally end the day near the high point of the day at 4942.80, posting a net gain of 35 points or 0.71%. The volumes remained on the lower side and the Markets have formed a almost parallel bar with slightly lower top and bottom on the Daily High Low Charts.

Technically speaking, since the Markets have ended the day near the high point of the day, they should, under normal circumstances, continue with their up move. However, this shall not happen following global cues and we are again likely to see a weaker opening. However, we are not expected to see lows below the opening levels as the Markets would again get OVERSOLD and the technicals would resist the downside.
For today, the levels of 4970 and 5025 are immediate resistance levels and the levels of 4905 and 4860 are immediate supports on the Charts.

The RSI—Relative Strength Index on the Daily Chart is 32.3078 and it has just moved above its Oversold area, which is Bullish. It does not show any negative divergence or failure swings and it is therefore neutral. The Daily MACD continues to trade below its signal line. 

On the Candles, An engulfing bullish line occurred (where a white candle's real body completely contains the previous black candle's real body).  The engulfing bullish pattern is bullish during a downtrend (which appears to be the case with NIFTY).  It then signifies that the momentum may be shifting from the bears to the bulls.

Having said this, it is important to note that had there been no negative global cues, the Markets were expected to continue with their imminent pullback. However, the weak global cues would cause a lower opening but, again, the technicals are likely to resist to any further weakness post opening. There are bright chances that the Markets open lower and after hovering around the low levels of the day, improves as we go ahead in the session because any lower opening would make the Markets OVERSOLD again.

All and all, the analysis remains the same as the Markets would get OVERSOLD again after the weaker again. The volatility would refuse to go away so retail investors should remain light on their positions and protect profits vigilantly. Shorts should strictly be avoided. Overall, cautious outlook is advised for today.

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



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