Daily Market Trend Guide -- Wednesday, August 19, 2015

MARKET REPORT                                                                                            August 19, 2015

Markets continued to trade much on expected lines as it consolidated in a volatile trade, managed to hang on to its 200-DMA and ended the day with very minor losses. The Markets saw a better than expected opening and it traded sideways while maintaining those gains. It strengthened further to form the day’s high of 8525.75 in the morning trade. Just when it seemed that the Markets were attempting to bounce back, it once again saw a sharp paring of the morning gains. The Markets came off sharply from the high point of the day. It went on to trade in the negative territory and also formed the day’s low of 8433.60, coming off nearly 90-odd points from the low point of the day. Thankfully, the Markets spent the second half of the session trying to recover from the lows. It managed to recover most of its losses and finally ended the day at 8466.55, posting a minor loss of 10.75 points or 0.13% while forming a parallel bar on the Daily Bar Charts.

MARKET TREND FOR WEDNESDAY, AUGUST 19, 2015

Analysis for today once again remains on similar lines that of yesterday. The Markets are expected to open on a flat to mildly negative note and look for directions. The Markets have been struggling hard to hang on to its 200-DMA and 50-DMA at Close levels and today as well, the intraday trajectory that the Markets form would be crucial to determine the trend for today as well as for immediate short term.

For today, the levels of 8525 and 8550 will act as immediate resistance levels for the Markets. The supports come in at 8459 and 8405 levels.

The RSI—Relative Strength Index on the Daily Charts is 50.0168 and it is neutral as it shows no failure swings or any bullish or bearish divergence. The Daily MACD is bearish as it continues to trade below its signal line.

On the derivative front, NIFTY August futures have continued to shed yet another over 2.41 lakh shares or 1.67% in Open Interest. The NIFTY PCR stands at 0.98.

Coming to pattern analysis, the Markets have been precariously hanging on to the neckline of the fragile head and shoulders formation on the Daily Charts. More so because the neckline represents the proxy support of the DMAs; 50, and 100, and the Markets have so far managed to hold these levels as Close. Today as well, with the kind of opening expected, the Markets will have to manage and remain above the 8450-60 levels in order to prevent any weakness from creeping in. Any weakness, however temporary it may be, will make the Markets test 8400 levels if it breaches the 200-DMA even intraday. However, the patterns exhibit some possibilities of consolidation going on but with a positive bias as the 50-DMA has reported a positive crossover over 100-DMA. In normal course, with such patterns, the Markets may consolidate but usually does not break its bottom.

Overall, as mentioned, the Markets may continue to see consolidation and its behaviour vis-à-vis the levels of 200-DMA would be critically important. It may be noted that despite inherent possibility of buoyancy, the Markets are not completely out of the woods and are susceptible to selling bouts at higher levels. Keeping this is view, we continue to reiterate view of keeping exposures limited until directional bias gets clear.

 Milan Vaishnav,
Consulting Technical Analyst

Af. Member: Market Technicians Association, (MTA), USA
Af. Member: Association of Technical Market Analysts, (ATMA), INDIA
www.EquityResearch.asia
http://milan-vaishnav.blogspot.com

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