Friday, April 25, 2014

Daily Market Trend Guide -- Friday, April 25, 2014

MARKET REPORT                                                                                 April 25, 2014
The expiry of the April series happened on Wednesday as yesterday was a trading holiday on account of voting in Mumbai constituencies. On Wednesday, the Markets saw a positive opening and remained positive throughout the session. After opening positive, the Markets kept inching upwards and formed its day’s high of 6861.60 in the afternoon trade taking the Markets to its fresh lifetime highs. However, the second half of the session saw the Markets paring most of its gains and traded nearly flat in the last hour of the trade. The Markets saw a sharp up move in the last 30 minutes of the trade, in a spurt that is very typical to short covering and expiry led trades. The Markets finally ended the day at 6840.80, posting a net gain of 25.45 points or 0.37% while forming a higher top and higher bottom on the Daily High Low Charts.


MARKET TREND FOR TODAY

Markets are yet to achieve a clear breakout from its critical zone and it now trades nearly overbought. Today, expect the Markets to open on a modestly negative note and look for directions. The Markets are likely to see some minor correction  / weakness at least in the initial trade. The intraday trajectory that it forms would be critically important and the Markets are likely to see some minor paring of gains.

For today, the levels of 6840 and 6865 would act as immediate resistance for the Markets. The supports come in much lower at 6740 and 6710 levels.

The lead indicators trade very near to its overbought zone. The RSI—Relative Strength Index on the Daily Chart is 69.7402 and it does not show any failure swings. The Markets have set a new 14-day high but the RSI has not yet and this is clear Bearish Divergence. The Daily MACD too remains bearish as it trades below its signal line. 

On the derivative front, the action very clearly reflected high degree of caution among traders. Though the Marketwide rollovers have been in line with the average, the NIFTY rollovers have remained much lower than its 3-month average. This signifies that the traders have put up a very cautious face.

Going by the pattern analysis, the Markets traded in a trading zone of 6650-6820 levels and then has since attempted a breakout. However, there has been no clear breakout from this broad range. The Markets are not likely to give a clear breakout from this range and we might see the Markets entering some minor correction range.

All and all, the Markets are showing some signs of weariness and there are bright chances that the Markets see some correction in the immediate short term. Any upside would be more of short covering lead and will take the Markets into “overbought” territory. It is advised that traders should maintain lighter positions in the Markets. Shorts should be avoided and very selective purchases may be made on dips. Overall, moderate exposure with cautious outlook is advised for today.

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


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