MARKET TREND FOR TODAY
October 29, 2012
The Markets spent the entire session in a falling channel
with a downward bias as it went on to drift for the entire session and ended
yet another day with losses. The Markets opened on a negative note and gave its
intraday high of 5697.20 in the very early minutes of the trade. Thereafter, it
formed a falling channel and a downward trajectory and continued to drift for
almost entire session. It went on to give the day’s low of 5641.75 and finally
managed to end the day after recovering a bit at 5664.30, still posting a net
loss of 41 points or 0.72%.It has formed a lower top and lower bottom on the
Daily High Low Charts.
For today, expect the Markets to open on a flat to mildly
positive note and look for directions. The start is expected to be quiet but
the bias would remain on the downside
given the structure of the Charts, the pattern analysis and also the F&O figures.
The intraday trajectory would be crucial to decide the trend for today.
The levels of 5730 continues to act as a major resistance
and the levels of 5620-5630 are expected to act as supports. Any breach of this
levels on the downside shall make the Markets weaker.
All lead indicators point towards continuing weakness. The
RSI—Relative Strength Index on the Daily Chart is 52.5763 and it has reached
its lowest value in last 14-days, which is BEARISH. Also, RSI has set a new
14-period low whereas the NIFTY has not, and this is BEARISH DIVERGENCE. The
Daily MACD continues to trades below its signal line.
On the Weekly Charts, RSI is neutral and shows no negative /
positive divergence or failure swings. But on the Candles, a Long Upper
Shadow has occurred. Such formation is typically bearish if it occurs under
present circumstances.
NIFTY futures have continued to shed minor Open Interest.
This shows that in absence of any addition of OI, no fresh longs have been
added and some amount of unwinding is done. Stock Futures too have shed Open
Interest in moderate manner.
Having said this, it needs to be reiterated that no fresh up
move shall occur until the Markets moves past the levels of 5730-5740 and
sustains above that. Until this happens, even though if we see
some intermittent pullbacks, it would be a mere range bound trade and no
aggressive longs should be built. There are bright chances that the Markets may
see temporary technical pullback and drifts again.
All and all, sustenance of levels of 5630 necessary for a
sideward consolidation and range bound trade. Any drift below this will cause
the Markets to get weaker. Fresh positions should be build very selectively as
there are chances that markets may test its support levels even if it sees
intermittent pullbacks. Overall, highly cautious outlook is advised for today.
Milan Vaishnav,
Consulting Technical Analyst,
+91-98250-16331
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