Daily Market Trend Guide -- Wednesday, January 06, 2016

MARKET REPORT                                                                                       January 06, 2016

Markets remained choppy and traded precisely as analyzed. In a range bound session, the rising trend line continued to act as resistance as the Markets ended the day with minor losses. The Markets saw a stable opening but formed its intraday high of 7831.20 in the early minutes of the trade. Soon after this, the Markets gradually pared its gains to trade flat. By early afternoon trade, the Markets slipped once gain into negative while forming the low point of the day at 7763.25. However, the Markets attempted to recover its losses and at one point it traded flat once gain. The second part of the session remained much capped as the Markets oscillated in a very narrow range. It finally settled the day at 7784.65, posting a minor loss of 6.65 points or 0.09% while forming a lower top and lower bottom on the Daily Bar Charts.

MARKET TREND FOR WEDNESDAY, JANUARY 06, 2016

Today’s analysis continues to remain more or less similar on yesterday’s grounds. We can expect the Markets to open on a flat note with a modestly bearish note and look for directions. The Markets have resisted today to the upward rising trend line as evident on the Charts. This level will continue to resist even if the Markets see any technical pullback. This level, until crossed on the upside, will continue to pose as a major pattern resistance in the immediate short term.

For today, the levels of 7820 and 7845 will act as immediate resistance levels for the Markets. Supports come in at 7750 and 7705 levels.

The RSI—Relative Strength Index on the Daily Chart is 45.5712 and it remains neutral as it shows no bullish or bearish divergence or any failure swings. The Daily MACD continues to remain bullish as it trade above its signal line.

On the derivative front, NIFTY January series have gone on to add another over 4.75 lakh shares or 2.35% in Open Interest. This signifies some more addition of short positions in the Markets.

While having a look at pattern analysis, we had mentioned in our yesterday’s edition that he Markets have breached a pattern support which existed in form of a rising trend line. Now, it was all likely that that pattern / rising trend line would act as resistance. Yesterday, precisely in line with this observation, the Markets formed its intraday high below this level and therefore this level continued to pose resistance.  While keeping today’s analysis similar on yesterday’s lines, this rising trend line will continue to act as resistance in the immediate short term so long as the Markets trade below that. For any up move to occur, the Markets will have to move past these levels. Until that happens, all we would see would be mere technical pullbacks which would always remain susceptible to intermittent selling bouts.

All and all, the Markets, though are stable than a day before, are not completely out of the woods. Any sustainable up move shall occur only above 7850 levels and until that happens the Markets are likely to oscillate in a range even in event of technical pullbacks. It is advised to continue to remain modest on exposures while maintaining a cautious outlook on the Markets.

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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