Daily Market Trend Guide -- Monday, April 20, 2015

MARKET REPORT                                                                                April 20, 2015

Markets continued to slide for the third day in a row as it ended yet another day of Friday with losses.   After opening on a modestly negative note, the Markets never really saw any trade on the positive territory. After opening negative, the Markets spent the morning session with limited losses while moving in a very narrow range. The second half of the session saw some more weakness creeping in as the Markets continued to resist to its 50-DMA and never really went above it. It saw some more weakness as lost further ground in the last hour and half of the trade. It went on to form the day’s low of 8596.70 and never saw any recovery coming in. It finally ended the day at 8606, posting a net loss of 100.70 points or 1.16% while continuing to form a lower top and lower bottom on the Daily Bar Charts.

MARKET TREND FOR MONDAY, APRIL 20, 2014

The Markets have continued to correct for the third day in a row on Friday. Today, we can once again expect the Markets to open on a flat note and look for directions. The Markets have breached its 50-DMA and its pattern support levels of 8640 and is now within striking distance of its 100-DMA which is 8567 and this level would now be critically important to watch out for.

For today, the levels of 8640 and 8690 would act as immediate resistance. The supports would come in at 8565 and 8540 levels.

The RSI—Relative Strength Index on the Daily Chart is 45.9727 and it continues to remain neutral without showing a bullish or bearish divergence or any failure swings. The Daily MACD still continues to remain bullish while trading above its signal line. On the Weekly Charts, the Weekly RSI is 54.1968 and this too remains neutral. The Weekly MACD is bearish as it trades below its signal line.

On the derivative front, NIFTY April futures have added over 11.32 lakh shares or 5.85% in Open Interest. This is a very clear indication that yet another massive bunch of shorts have been created in the Markets. NIFTY PCR stands at 0.96 as against 1.01.

Taking about pattern analysis, the Markets pulled up nearly 493-odd points at Close levels post lows that it posted on March 27^th. However, in last three sessions, the Markets have shown correction and it has corrected nearly 228-odd points at Close levels. If we talk of percentage, it has corrected nearly 45% of its total pullback. Given this point, even if the Markets see some minor weakness, the levels of 100-DMA are more likely to lend support to the Markets.

All and all, given that the Markets have nearly corrected 45% of the total pullback that it saw post March 27^th, it is also important to note that it has added huge amount of shorts in the previous three sessions. This is very clearly evident from the increase in OI that we have witnessed. Given this scenario, we continue to strongly reiterate to avoid any shorts. The Markets are likely to find support within very short range and this may lead to recovery from lower levels. While continuing to maintain liquidity, positive caution is advised for the day.

Milan Vaishnav,

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

www.MyMoneyPlant.co.in

http://milan-vaishnav.blogspot.com

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