MARKET REPORT May
12, 2014
Markets on Friday showed an massive up move fuelled by
equally massive short covering ahead of major exit poll today in the evening as
it surged with unexpected magnitude to end the day with robust gains on fresh
lifetime highs. The Markets opened subdued and remained in the capped range in
the first hour of the trade but soon it formed a rising trajectory and
strengthened itself. There was no looking back for the Markets since then and
the Markets kept making new intraday highs. It went on to touch the levels of
6871.35 towards the end of the session. It finally ended the day at 6858.80,
posting a robust gain of 198.95 points or 2.99% while forming a sharply higher
top and higher bottom on the Daily High Low Charts.
MARKET TREND FOR TODAY
This week shall remain immensely important for the Markets
today as the Markets will see results for General Elections coming out on 16th.
But before that, today’s day would remaining equally important as one of the
biggest exit poll in the Indian history will make its way out today. Further
there are IIP and March CPI numbers coming in today. However, all of these
events would come out after the Market hours and this promises to keep the
today’s session bit volatile.
For today, if the Markets open positive, it would again
trade in the uncharted territory with the levels of 6895 and 6920 expected to
act as immediate resistance. The supports come much lower at 6650 levels.
The RSI—Relative Strength Index on the Daily Chart is
65.0161 and it does not show any kind of failure swings. However, the NIFTY has
set a new 14-period high but the RSI has not yet and it shows Bearish
Divergence. The Daily MACD still continues to remain bearish as it trades below
its signal line. 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.
All the above reading is purely technical
based and going as per the pattern analysis, the previous top of 6869 has also
not bee taken out. Further even in case of higher opening the sustaining of
markets at higher levels would be important for the Markets to achieve a
clear-cut breakout on the Daily Charts.
However, all of the above technical
reading may take a back seat due to one of the most major external events. So,
even if the plain reading of the technical chart poses doubts over
sustainability of up move, such up moves can occur due to actions arising out
of such external events and therefore short should be avoided. On the other
hand, blind buying too should be avoided as great amount of volatility is also
expected in today’s as well as immediate few sessions. Remaining very moderate
on exposures, high degree of caution is advised for today.
Milan Vaishnav,
Consulting Technical Analyst,
+91-98250-16331
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