Sunday, September 7, 2014

Daily Market Trend Guide -- Monday, September 08, 2014

MARKET REPORT                                                                             September 07, 2014
On Friday, the Markets continued to consolidate and did so with some amount of volatility ingrained as it held its previous top and ended the day with minor losses. The Markets opened on a positive note and formed its intraday high of 8122.70 in the early minutes of the trade. Markets hovered around those levels and did not move past its previous high and shed some of its gain as it went ahead in the session. The Markets saw paring of all of its gains by afternoon trade but traded with capped losses in the negative territory as well.  In the end it slipped little further to form the day’s low of 8049.85 by recovered from that low as well. It finally ended the day at 8086.85, posting a minor loss of 9.10 points or 0.11% while forming a almost parallel bar on the Daily Bar Charts. 


MARKET TREND FOR MONDAY, SEPTEMBER 08, 2014

Tomorrow’s opening would continue to remain crucial. As evident, the Markets have not moved past its previous high of 8141.90. In order to continue with its up move the Markets will have to move past that level. Further, we can expect a quiet opening tomorrow and it would be critically important for the Markets open and trade 8050-8075 levels in order to avoid any weakness. 

The levels of 8140-50 and 8075 would continue to act as resistance. The supports exists at 7970 and 7910 levels.

The RSI—Relative Strength Index on the Daily Chart is 70.7605 and it does not show any bullish or bearish divergence or any failure swings. However, it trades in “overbought” territory. The Daily MACD too trades above its signal line. On the Weekly Charts, the Weekly RSI is 72.4461 and it does not show any failure swings. However, it not only trades in “Overbought” territory, but also shows a Bearish Divergence as it has not formed its 14-period high whereas NIFTY has done so. The Weekly MACD continues to trade above its signal line.

On the derivative front, the NIFTY September futures have gone on to shed over 5.77 lakh shares or 3.63% in Open Interest. This phenomenon has been observed for second day in a row and it clearly shows offloading of long positions at higher levels.

Going by pattern analysis, the Markets have not shown a clear breakout from a broadening formation. It did attempt to breakout but have shown a throwback on expected lines. Any closing in the range of 8070-50 would bring the Markets again in that formation and therefore no breakout would be achieved. Further, on the other side, even if the Markets achieve further up move it is doing to while in “overbought” condition and this would certainly make the Markets heavily prone to selling from higher levels.

Overall, taking in view the pattern and structure of the Charts and also keeping in mind the F&O data and the Weekly Charts as well, the Markets are not likely to have a run-away rise from here. Even if it does, it would be heavily prone from pressure from higher levels and also get further overbought. There are all chances that the volatility would persist. Any upside should be continued to be used for protecting profits. While making selective purchases as well, vigilant approach is advised.

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


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