Daily Market Trend Guide -- Tuesday, October 20, 2015

MARKET REPORT                                                                                    October 20, 2015

The Markets attempted to break out of the congestion zone yesterday as it made a feeble attempt to move past the resistance zone and end the day with modest gains. The Markets saw a positive and better than expected start but after a positive start; it soon drifted to its previous close levels and traded flat. The Markets spent most part of the session in a sideways trajectory trading in a narrow range while it formed its day’s low of 8239.20. Markets continued to trade sideways but it was the second half of the trade once again that saw some strength coming in. The Markets gained some strength and formed its intraday high of 8283.05. Some more sideways movement came in, the Markets more or less maintained these levels and finally ended the day at 8275.05, posting a net gain of 36.90 points or 0.45% while forming a higher top and higher bottom on the Daily Bar Charts.

MARKET TREND FOR TUESDAY, OCTOBER 20, 2015

Markets continue to poise them at a critical juncture as it is made a feeble attempt to move out of the congestion zone. Today, we can expect the Markets to open on a modestly positive to flat note and then look for directions. There are chances that the Markets continue to consolidate at higher levels rather than giving a runaway rise. The intraday trajectory that it forms post opening would be crucial to determine the trend for today as well as for immediate short term.

For today, the levels of 8290 and 8330 will act as immediate resistance for the Markets. The supports come in at 8240 and 8180 levels.

The RSI—Relative Strength Index on the Daily Chart is 63.2688 and it has reached its highest value in last 14-days which is bullish. It does not show any bullish or bearish divergence. The Daily MACD remains bullish as it trades above its signal line.

On the derivative front, the NIFTY October futures have shed over 3.90 lakh shares or 1.92% in Open Interest. This shows some unwinding of positions at higher levels and may cause the Markets to remain in consolidation zone for some more time.

Coming to pattern analysis, the Markets have attempted to move past the upper boundary of the congestion zone but the attempt so far has been bit feeble. Further, it has come while shedding Open Interest and therefore it is likely that the Markets may continue to remain in consolidation zone for some more time. In the same breadth, the 8230-8240 levels which the Markets managed to move past yesterday should act as immediate pattern support. Any breach of the levels on the downside will take the Markets back into the broad consolidation zone. Therefore, it would be important for the Markets to maintain itself above 8230-8240 levels in order to just consolidate for some more time and avoid any weakness.

All and all, the Markets may open flat and see some sideways consolidation in the initial trade. However, given the structure of the technical charts, by no means are the Markets weak and they are in fact making attempts to move out of the consolidation zone that they have been trading in. In event of any more consolidation or temporary downsides, these downsides should be utilized to make  quality purchases on moderate levels while protecting profits going ahead until a clear directional breakout is achieved.

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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