Monday, August 13, 2012

Daily Market Trend Guide -- Monday, August 13, 2012

MARKET TREND FOR TODAY                                                         August 13, 2012
The Markets had a very volatile session on Friday as it opened lower, went further into the red, recovered from its day’s lows and ended the day flat with very negligible losses. The Markets opened on a moderately negative note. It traded in a capped range in the beginning and then slipped further into the red as it gave its day’s low of 5294.10. However, in the second half of the session, it saw some recovery as the Markets recovered from its day’s lows and also went marginally into the green giving the day’s high of 5330.10. It hovered in a capped range in the last hour of the trade and finally ended the day at 5320.40, posting a very negligible loss of 2.55 points or 0.05%. The Markets have formed a lower top and lower bottom on the Daily High Low Charts.

Today, we can expect a fairly quiet start in the Markets. The Markets are expected to see a very quiet and flat opening and shall look for direction as they would continue to consolidate. Because of ongoing consolidation, the intraday trajectory would be critically important to decide the trend for today.

The levels of 5335 and 5355 shall act as immediate resistance on the Charts and the levels of 5290 and 5255 would be immediate supports on the Charts.

The RSI—Relative Strength Index on the Daily Charts is 61.1484 and it is neutral as it shows no negative divergence or failure swings. The Daily MACD continues to trade above its signal line. The Weekly RSI is 56.3011 and it does not show any failure swing but the NIFTY has set a new 14-week low but the RSI has not and this is BEARISH DIVERGENCE. The Weekly MACD however continues to trade above its signal line. 

Reading this along with the F&O statistics clearly indicates that the consolidation activity is likely to continue and it can also turn into minor correction. This also clearly indicates that no run-away rise in the Markets is likely to be seen in this week and it also further indicates that there are possibilities that the Markets may weaken further as the week goes by.

All and all, the levels of 5377 have become a immediate top for the Markets and fresh and sustainable up move can occur only if the Markets moves past these levels. Until then, range bound and volatile movements shall occur and bouts of profit taking would continue to be seen. While remaining highly selective during this phase of the Markets, cautious approach should be adopted today, and for the coming week if these technicals are to remain constant.

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


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