Tuesday, May 28, 2013

Daily Market Trend Guide -- Tuesday, May 28, 2013

MARKET TREND FOR TODAY                                                                   May 28, 2013
While defying all  technical indicators and the derivative data, the Markets had a robust session and it ended the day with strong gains near its pattern resistance. The Markets opened on a flat note and momentarily dipped into the red as it gave its day’s low of 5975.55 in the very early minutes of the trade. The Markets then immediately came into the positive territory and then spent most of the session in a sideways movement and traded with capped gains. The last hour and half of the session brought in bit a surprised as the Markets gained further strength. It perked up further and went on to give the day’s high of 6099.90 towards the end of the session. It came of a bit from those levels but finally ended the day at 6083.15, posting strong gains of 99.60 points or 1.66% while forming a sharply higher top and bottom on the Daily High Low Charts.


Today, we are likely to see a flat opening in the Markets. The Markets have closed near the pattern resistance levels of 6090-6100. This is the level which it breached on its way down and therefore, it is likely that the Markets shall resist at these levels. The opening, therefore, would be crucial. If the markets manages to move past the levels of 6090-6100, it can move up further, but otherwise, it may again resist at these levels and we may the Markets consolidating again. Rollovers are likely to continue to dominate the session.

For today, the levels of 6100 and 6130 shall act as resistance. The supports come in much lower at 6020 and 5975 levels.

The lead indicators remain neutral. The RSI—Relative Strength Index on the Daily Chart is 56.7271 and it is neutral as it shows no negative divergence or failure swings. The Daily MACD continues to trade below its signal line and therefore continues to remain bearish. 

On the derivative front, NIFTY May futures have shed over 21.27 lakhs shares or over 8.79% in Open Interest whereas June Futures have added over 24.71 lakhs shares or over 92.19% in Open Interest which signifies heavy rollovers taking place.

Overall, if we go with the pattern analysis, the Markets are likely to resist around 6100 levels. We might see temporary up move if the Markets move past these levels but otherwise, the chances of the Markets consolidating again are higher. However, this being the rollover week, the volatility shall remain and we will see the Markets trading on either side in the volatile manner. 

All and all, the opening levels of the Markets and its behaviour vis-à-vis the levels of 6100 shall dominate the directional trend for today. The Markets are expected to find resistance around this levels. However, as mentioned above, this being expiry week, volatile movements on either side cannot be ruled out. It is advised to remain light on positions and taking aggressive positions on either side should avoided. Overall, continuance of cautious outlook is advised for today.

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


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