Wednesday, March 23, 2016

Daily Market Trend Guide -- Wednesday, March 23, 2016

MARKET REPORT                                                                                   March 23. 2016
The late session recovery saw the Markets ending with modest gains but it did continue to see stiff resistance at its key pattern resistance levels. The Markets saw a very quiet and modestly negative opening though it spent the morning trade trading flat in a very narrow and capped range. The afternoon trade saw the Markets weakening as it formed a downward falling channel. It kept making gradual lows and formed its intraday low of 7643.80 in late afternoon trade. The last hour and half, however, saw a sharp spurt coming in. Not only did the Markets managed to recoup all of its losses but went on to trade in the positive. It went on to form the intraday high of 7728.20, and resisted at its key pattern resistance lines. It finally settled the day at 7714.90, posting a modest gain of 10.65 points or 0.14% while forming a higher top and higher bottom on the Daily Bar Charts.

MARKET TREND FOR WEDNESDAY, MARCH 23, 2016
Today’s analysis remain on similar lines that of yesterday. The Markets are likely to open on a flat note and look for directions. With the total pullback being nearly 900-odd points old, and the Markets very clearly approaching its multiple pattern resistances, it is very much likely that the Markets consolidate at higher levels. Either the Markets will consolidate displaying strength just as it did yesterday; or there can be some amount of profit taking at higher levels.

For today, the levels of 7730 and 7775 will act as immediate resistance levels for today. The supports come in much lower at 7643 and 7600 levels.

The RSI—Relative Strength Index on the Daily Chart is 66.9470 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 continues to remain bullish as it trades above its signal line.

On the derivative front, the NIFTY March futures have shed further over 4.13 lakh shares or 1.92% in Open Interest. There has been clear reduction in March positions over two previous days.

Coming to pattern analysis, the Markets have pulled back over 900-odd points from the lows that it made in the Budget session. In the process, it consolidated for several days near 7550 levels. This is the level which was a triple bottom of a descending triangle that the Markets broke on the downside and this very level acted as stiff pattern resistance when the Markets were pulling back. Having said this, the Markets have moved past that as well and also its 100-DMA but now it meets multiple pattern resistance at present levels. There are high chances that the Markets may either consolidate at present levels or it may see some minor profit taking from higher levels.

Overall, it is also important to note that today is the last working day of the week as Thursday and Friday are holidays on account of Holi and Good Friday respectively. This may also cause some caution of weigh in to the Markets ahead of the holidays. Having said this, even speaking from the technical perspective, we continue to reiterate our advice to keep purchases very limited and lay more emphasis on protection of profits at higher levels.


Milan Vaishnav,
Consulting Technical Analyst

Member: Market Technicians Association, (MTA), USA
Member: Association of Technical Market Analysts, (ATMA), INDIA

+91-98250-16331

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