Thursday, October 10, 2013

Daily Market Trend Guide -- Thursday, October 10, 2013

MARKET REPORT                                                                                              October 10,2013
The Markets had a robust session after a weak opening yesterday wherein it opened negative, formed the day’s low in and then recovered over 110-odd points to end the day near the high point of the day. The rally was fuelled by a positive trade data which saw the trade deficit narrowing and touching a 30-month low. The Markets opened weak and formed its day’s low of 5877.10 in the morning trade. However, soon after this, the Markets transformed itself into rising trajectory and for the rest of the session kept gradually making new highs. It came back into the green and went on to give the day’s high of 6015.50. It maintained those levels and finally ended the day at 6007.45, posting a net gain of 79.05 points or 1.33% while forming a higher top but lower bottom on the Daily High Low Charts.


MARKET TREND FOR TODAY

Today, expect the Markets to take a breather and open on a negative note. The Markets are expected to open on a lower note again and look for directions. The consolidation would be seen again today and the intraday trajectory would continue to remain important. The further up move would be seen only if the Markets move past the levels of 6035.
The levels of 6035 and 6070 are immediate resistance levels on the charts. The supports exist at 5920 levels and further down at 5840 levels. This keeps the Markets in a broad trading range.
The RSI—Relative Strength Index on the Daily Chart is 61.3629 and it is neutral as it shows no bullish or bearish divergence or any kind of failure swings. The Daily MACD, as we had reported yesterday has today given a positive crossover and it is now bullish as it trades above its signal line. However, on the Candles, An Engulfing Bullish Line has occurred. If the engulfing bullish pattern occurs during an uptrend (which appears to be the case with NIFTY), it may be a last engulfing top which indicates a top.  The test to see if this is the case is if the next candle closes below the top of the current (white) candle's real body.
On the derivative front, the NIFTY October futures have added over 7.82 lakh shares or 5.05% in Open Interest. This is a positive indication as this shows that fresh longs were added after two days of short covering and shedding of Open Interest.
Taking into account the pattern analysis, lead indicators and the F&O data, it can be fairly be concluded that the Markets have finally attempted to form a bottom at its 200-DMA, at least as of now and we can expect a certain upward bias. However, looking at a candle formation, there are mild chances that the Markets consolidates again for a while. However, this would be a range bound consolidation, if at all it happens as the Markets still continue to remain in a broad trading range.
All and all, though we may see a mildly negative opening, we will see the Markets consolidation in the initial trade and remain in a broad trading range. Though it has not achieved a confirmed break out as yet, the bias certainly remains positive. However, the Markets still continues to remain in a broad trading range. Any position that is taken should be taken very selectively and profits should still be vigilantly protected. Positive outlook with mild caution is advised for today.

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



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