Monday, July 15, 2013

Daily Market Trend Guide -- Monday, July 15, 2013

MARKET REPORTB                                                                                   July 15, 2013
The Markets continued with its robust up move as it opened positive, traded with capped gains and perked up further to end the day with strong gains.  The Markets opened on a decently positive note and after opening into positive, traded sideways with capped gains. The Markets maintained these gains until most part of the session. However, in the last hour and half of the gains, the Markets perked up further and went on to move past the psychological 6000 market and went on to give the day’s high of 6019. The Markets sustained those strong gains and managed the end the day near its highest point at 6009, posting yet another robust gain of 73.90 points or 1.25% forming a sharply higher top and higher bottom on the Daily High Low Charts.

MARKET TREND FOR TODAY

On the Daily Charts, the Markets have successfully achieved a breakout on the upside from the broad trading range and it is expected that the Markets shall extend its gains in the immediate short term. Expect the markets to open on a flat to modestly positive note and look for directions. However, given the sharp rise, minor profit taking at higher levels cannot be ruled out while keeping the overall trend intact.

For today, the levels of 6035 and 6090 are immediate resistance on the Daily Charts. The supports come in at 5951 and 5920 levels.

All lead indicators continue to remain firmly in place. The RSI—Relative Strength Index on the Daily Chart is 60.4332 and it has reached its highest value in last 14-days which is bullish. It does not show any bullish or bearish divergence. The Daily MACD continues to remain bullish as it trades above its signal line. On the Candles, A rising window occurred  (where the top of the previous shadow is below the bottom of the current shadow).  This usually implies a continuation of a bullish trend.  There have been 7 rising windows in the last 50 candles--this makes the current rising window even more bullish.

On the Weekly Charts, the RSI is 56.2327 and it is neutral as it shows no bullish or bearish divergences or any kind of failure swings. The Weekly MACD is bearish as it trades below it signal line but it is moving towards reporting a positive crossover.

On the derivative front, the NIFTY July Futures have continued to add over 8.44 lakh shares or over 5.02% in Open Interest. This further continues to suggest long built up and also signifies that the Friday’s rise has been due to addition of longs and not due to short covering.

Having said this, it is clear that the Markets have added long positions while it broke out from its trading range. The markets have successfully achieved a breakout and now the key would be to see if it sustains it. However, due to sharp rise in previous two sessions, mild chances of minor profit taking at higher levels cannot be ruled out. However, given all the technical factors that remain absolutely in place, the Markets are expected to test 6100 levels before it consolidates again.

All and all, as stated above, all lead indicators and technicals remain firmly in place. There is no external event either that would pose immediate threat to the Markets in the immediate short term. Given this, it is likely that the Markets continue to extend its up move. However, given the sharp rise in previous two session, mild chances of profit taking at higher levels cannot be ruled out. This is keep the markets in trade in narrow band. However, while shorts should be avoided, any dip should be used to add selective long positions. Overall, continuation of positive outlook is advised for today.

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


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