Sunday, October 19, 2014

Daily Market Trend Guide -- Monday, October 20, 2014

MARKET REPORT                                                                                   October 17, 2014
The Markets had a relatively better session yesterday as the Markets showed recovery to end the day with modest gains with some signs of stabilization in the weak global markets. The Markets opened on a mildly positive note and contrary to the expectation, it dipped into the negative to form the day’s low of 7723.85 in the late morning trade. However, it held on to the support of 100-DMA levels, intraday, and attempted to pullback from those levels. The Markets spent rest of the session in upward rising trajectory. It recovered all of its morning losses and came back in the positive territory. It went on to gradually form highs and thereby went on to register its intraday high of 7819.20. Again, the levels of 7800-20 acted as resistance and the Markets finally settled the day at 7779.70, posting a modest gain of 31.50 points or 0.41% while forming a lower top and similar bottom on the Daily Bar Charts.


MARKET TREND FOR MONDAY, OCTOBER 20, 2014

Markets present little precarious picture on the Daily Charts. Expect the Markets to open on a modestly positive note and it is expected that the Markets would continue with its attempted recovery. Fact that it took support nearly twice on its 100-DMA, pullbacks in the global markets, outcome of Maharashtra and Haryana polls on expected lines, etc., would aid our technical attempt of pullback. On the same lines, it would be very important for the Markets to move past the 7800-20 levels in order to successfully post a pullback.

The levels of 7800-20 and 7865 would act as resistance and the supports would come in at 7742 and 7705 levels.

The RSI—Relative Strength Index on the Daily Chart is 39.8413 and it is neutral as it shows no bullish or bearish divergence or failure swings. The Daily MACD remains bearish while trading below its signal line. On the Weekly Charts, the Weekly RSI is 58.2240 and it has reached its lowest value in last 14-weeks and this is bearish. Further, the Weekly RSI has set a new 14-week low whereas NIFTY has not yet and this portrays Bearish Divergence. The Weekly MACD continues to trade below its signal line. 

On the derivative front, the NIFTY has added over 12.05 lakh shares or 8.35% in Open Interest. This open interest addition is significant and we can easily interpret that the Markets have added quite significant amount of short positions and it is very much likely that in event of any downside, the levels of 100-DMA are likely to continue to act as supports an these short positions would also act out as supports.

Returning to pattern analysis, the Markets have done both – taking support at its 100-DMA levels nearly twice and also continuing to resist to 7800-20 zone, the support zone which it broke on the downside. Now these levels would continue to act as resistance and it would be very important for the Markets to move past these levels in order to pullback successfully. Failure to do so will result into higher chances of the Markets returning towards its 100-DMA.

Going forward, it is advised to continue with positive caution and approach the Markets accordingly. We might see some decline in overall volumes due to festival season this week however, volatility is certainly to stay in the Markets. Also reading the weekly charts, it is unlikely that the Markets see a runaway rise. Any pullback will see the Markets back in a trading range. While remaining low on overall exposure, positive caution is advised.

Milan Vaishnav,
Consulting Technical Analyst,
Af. Member: Market Technicians Association (MTA), USA
Af. Member:
Association of Technical Market Analysts, INDIA

www.MyMoneyPlant.co.in
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