Monday, July 23, 2012

Daily Market Trend Guide -- Monday, July 23, 2012

MARKET TREND FOR TODAY                                                               July 23, 2012
The Friday saw a very listless and lackluster session as the Markets opened negative and spent the entire session in a extremely narrow range and ended the day with moderate losses. The Markets opened on a negative note and gave its intraday low of 5197.50 in the early morning trade. It then spent the entire session in a very narrow 20-odd point range and ended the session around the same levels at 5205.10, posting a moderate loss of 37.60 points or 0.72%. It has formed a lower top and lower bottom on the Daily High Low Charts. On a Weekly note, the Markets have ended the week with moderate loss  of 22.15 points or 0.42%. The volumes remained below the average.

For today, though there is no negative signal / breach on the Daily or Weekly Charts, the domestic Markets are likely to open on a lower and negative note following global weakness and look for directions. Here, the technical would come into play as the opening levels would be around the support levels on the  Charts and it would be crucial to see if the Markets takes support around these levels during the day.

For today, the levels of 5165 and 5150 would be crucial support levels and the behavior of the Markets vis-à-vis these levels would be important to watch for.

Importantly, apart from there being no negative breach on the Daily and Weekly Charts, the lead indicators too continue to remain very much in place. The RSI—Relative Strength Index on the Daily Chart is 50.8012 and it shows no negative divergence or failure swings. The Daily MACD trades below its signal line. Even on the Weekly Charts, the RSI is 52.1612 and it is neutral as it shows no negative divergence or failure swings. The Weekly MACD is bullish as it trades above its signal line.

Further important to note that there has been no significant fall in the Open Interest is recorded in this entire week and thus, there are no indications of any high unwinding has been seen in the Markets.

However, we enter the expiry week today, and the sessions in the coming weeks are likely to remain dominated with rollover centric activities. That being said, the Markets shall also remain range bound and volatile given the technicals, but it is important to note again that there is no negative breach /  signals as of today on Daily or Weekly Charts.
All and all, opening around support levels expected. It would be critical to see if the Markets recovers as we go ahead in the session. Intraday trajectory would be very important to decide the trend for today. Aggressive positions on either side to be avoided and adequate liquidity should be maintained. Overall, cautious outlook is advised for today.

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


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