Daily Market Trend Guide -- Monday, October 05, 2015

MARKET REPORT                                                                            October 05, 2015

Markets had a day of consolidation on Thursday as it opened near its key resistance zone and during the day, pared its opening gains to end the day on a flat note. The Market saw a better then expected positive opening and formed its intraday high of 8008.25 in the morning trade after trading in a capped range. The Markets soon pared all of its opening gains, very much on expected lines as the key resistance zone of 7960-8000 played its part, and it traded flat near its previous Close. The Markets thereafter traded in sideways trajectory for the rest of the session trading in a very narrow and capped range. While forming the day’s low of 7930.65 in the afternoon trade, the Markets remained sideways in a 20-odd point range. While remaining directionless, the Markets finally ended the day at 7950.90, posting a nominal gain of 2 points or 0.03% while forming a higher top and higher bottom on the Daily Bar Charts.

MARKET TREND FOR MONDAY, OCTOBER 05, 2015

Today’s analysis continues to remain on similar lines that of Thursday. Reason being, the Markets are slated to open on a positive note and once again open near its key resistance zone of 8000-mark. Having said that, the Markets have multiple resistance zone ahead of 8000-mark which include 8061, the pattern resistance created by the Gap that the Markets created in the early September. Having said this, once again, it would be paramount importance that the Markets maintain its gains post opening. The intraday trajectory that the Markets form post opening would once again be of critical importance.

For today, the levels of 8000 and 8061 will be immediate resistance levels for the Markets. The supports come in at 7910 and 7860 levels.

The RSI—Relative Strength Index on the Daily Chart is 50.8484 and it has reached its highest value in last 14-days which is bullish. Also, the RSI has formed a fresh 14-period high whereas NIFTY has not yet, and this is Bullish Divergence as well. The Daily MACD remains bullish as it continues to trade above its signal line. On the Weekly Charts, the Weekly RSI is 23.2360 and it remains neutral as it does not show any bullish or bearish divergence or any failure swing. The Weekly MACD remains bearish as it continues to trade below its signal line.

On the derivative front, the NIFTY October series have added over 4.39 lakh shares in Open Interest. The NIFTY PCR stands at 0.91 as against 0.92 on Thursday.

Coming to pattern analysis, the Markets still continue to trade within a broad trading range that it has formed after the breakdown on the lower side in the early September. The Markets still continues to face stiff pattern resistance near the 7960-8000 mark followed by 8061 because of the breakaway gap that it created post break down from the Head and Shoulder Formation in early September. Having said this, as mentioned, it would be critical importance for the Markets to move past these key pattern resistance zones to try and confirm the reversal of trend. Until this happens it will continue to trade in this current trading zone. Even on the Weekly Charts, the 8000-mark is a important pattern resistance.

Because of all this, it becomes even more important for the Markets to maintain its opening gains and capitalize on it. Until these pattern resistances are cleared, the Markets would continue to remain vulnerable to sell-offs and profit taking bouts at higher levels. No significant fresh purchases should be made until these levels are crossed and all such up moves should be utilized in protecting profits. Fresh purchases, as usual, should be kept very selective and limited.

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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