Sunday, November 30, 2014

Daily Market Trend Guide -- Monday, December 01, 2014

MARKET REPORT                                                                  November 28, 2014
Markets on Friday continued to surge ahead attempting a fresh breakout once again as it opened positive, strengthened further and ended the day with decent gains. The Markets saw a positive opening and after this, went on to post new highs gradually. It formed its intraday high of 8617 in the late morning trade. The afternoon session saw the Markets maintaining those gains in a steadfast manner. Going ahead in the afternoon session, some minor paring of gains was maintained as the Markets saw a minor retreat from intraday highs. However, not much of the gains were pared and the Markets finally ended the day at 8588.25, posting a net gain of 94.05 points or 1.11% while forming a higher top and higher bottom on the Daily Bar Charts.


MARKET TREND FOR MONDAY, DECEMBER 01, 2014 

The Markets have once again attempted a breakout on the upside but not trade overbought again. Expect the Markets to open on a quiet note and also expect it to trade mildly positive in the initial trade. However, given the technical structure, some amount of profit taking from higher levels just cannot be ruled out as the current up move is fuelled by liquidity.

The levels of 8620 and 8645 would act as immediate resistance for the Markets. The supports would come in at 8510 and 8460 levels.

The RSI—Relative Strength Index on the Daily Chart is 73.6449 and it shows no failure swing. However, it trades in “overbought” area and also shows Bearish Divergence as the RSI has not posted a fresh 14-period high whereas the NIFTY has. The Daily MACD trades bullish above its signal line. On the Weekly Charts, the Weekly RSI is 74.9885. It is bullish as it has reached its highest value but it also trades in “overbought” area. The Weekly MACD is bullish but this too now is “overbought”.

On the derivative front, the NIFTY December futures have added yet another over 12.75 lakh shares or 6.09% in Open Interest. This clearly shows that there has been addition of fresh longs in the system .

Coming to the pattern analysis, the Markets are now trading at a major pattern resistance levels on the Weekly Charts. The Markets can face stiff resistance near 8600-8630 range. The Markets may move past these levels driven by liquidity but this would be extremely unhealthy for the Markets, at least technically speaking. There are strong chances that the Markets face resistance some selling bouts, though intermittently, at higher levels. The Markets are overbought on Daily Chart and on the Weekly Charts as well. 

Given this technical reading, there are strong chances that we might see intermittent selling bouts even if the Markets continue to remain fuelled by liquidity. It would be of extreme importance that one keeps protecting profits at higher levels. Up moves, with this structure of the Charts, cannot be taken for granted and therefore fresh positions should be taken with extremely caution and on highly selective basis.

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

www.MyMoneyPlant.co.in
+91-98250-16331

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