Monday, October 21, 2013

Daily Market Trend Guide -- Monday, October 21, 2013

MARKET REPORT                                                                                      October 21, 2013
The Markets had an extremely buoyant session on Friday as the Markets opened on a positive note and remained in positive rising trajectory for the entire session as it closed the day with robust gains. The rally was primarily fuelled by fresh purchases on the hopes that the Federal liquidity tapering shall not occur following US Government shutdown impasse. After opening on a positive note, the Markets, throughout the session kept giving new intraday highs as it continued to inch upwards steadily. Towards the end, it went on to give the day’s high of 6201.45 and finally ended the day at 6189.35, posting a robust gain of 143.50 points or 2.37% while forming a sharply higher top and bottom on the Daily High Low Charts.


MARKET TREND FOR TODAY

The Markets have moved past the critical resistance zone of 6130-6150. Today as well, they are likely to open on a mildly positive to flat note. Any positive opening would take the Markets to its very major resistance level of 6220-6235 zone. It is very likely that the Markets see some profit booking from these levels.

For today, the levels of 6210 and 6130 would act as major resistance levels for the Markets. The supports exist at 6130 and 6055 levels.

The RSI—Relative Strength Index on the Daily Chart is 67.1580 and it has reached its highest value in last 14-days which is bullish. It does not show any kind of bullish or bearish divergence. The Daily MACD continues to remain bullish as it trades above its signal line. 

On the derivative front, NIFTY October futures have shed over 4.17 lakh shares or 2.17% in Open Interest. This shows that some amount of shedding of open positions, or some profit booking has been witnessed at higher levels.

Given the pattern analysis on the Daily Charts, it is likely that the Markets open positive but that opening would cause the Markets to open near its very important and major resistance levels of 6220-6230 levels. The likelihood of the Markets seeing some consolidation / profit taking from these levels is more because if the Markets go ahead and breach these levels as well, it would turn overbought and the rise would get somewhat unhealthy. Even if the lead indicators are analysed, they shows the chances of some bearish divergences occurring in the next few sessions to come.

Overall, given the above reading, there are chances that the Markets see some amount of profit taking from higher levels. If the Markets continue with its up move, the rise would get little unhealthy and we would advise retail investors to refrain from any aggressive buying and continue to protect profits on existing positions at higher levels. Overall, positive caution is advised for today.

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


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