MARKET TREND FOR WEDNESDAY, APRIL 27,
2016
Speaking purely on technical grounds, the
Markets have ended near the high point of the day yesterday and today we can
fairly expect the Markets to continue with its up move, at least in the initial
trade. Having said this, it still becomes important to note that the Markets
have not yet achieved a clear breakout on the Daily Charts and have still
chosen to remain below the upper band resistance level of 7978. It would be
today, if at all, that the Markets will attempt to achieve a breakout.
Today, the levels of 7980 and 8030 will act
as immediate resistance for the Markets. The Supports will come much lower at
7858 and 7810 levels.
The RSI—Relative Strength Index on the
Daily Chart is 67.4561 and it does not show any failure swing. The NIFTY has
formed a fresh 14-period high whereas RSI has not yet and this is Bearish
Divergence. The Daily MACD still remains bullish as it trades above its signal
line. On the Candles, an Bullish Engulfing Pattern has occurred.
However, its importance on the upper side is diminished as it has occurred during
an uptrend. On the contrary, it may form a potential top once again. However,
this requires confirmation today.
On the derivative front, the rollovers
continued as the NIFTY April futures shed over 22.21 lakh shares or 15.86% in
Open Interest. The May Futures added over 60.08 lakh shares or 103.23% in Open
Interest.
Coming to pattern analysis, the Markets
formed its intermediate top at 7978 levels on April 21st, and then
corrected a bit from there. The Markets took supports at its 200-DMA which
stand at 7858 today and remained in this 120-odd point trading range.
Yesterday, even after the rise the Markets have not moved past 7978 levels and
therefore have not achieved any clear breakout. It would attempt to have a
breakout today. If the Markets manage to move past the 7978 levels and sustain
above that, we will see some more upsides in the Markets.
However, the lead
indicator shows some very minor signs of tiredness in the Markets and if the
Markets do not move past 7978 levels, we will see them continuing to
consolidate once again.
Overall, today, we can fairly expect the
Markets to attempt a breakout if it moves past 7978 levels. However, if that happens
we will see the Markets testing the pattern resistance of 8030 levels. If this
does not happen, we will once again continue to see the Markets consolidating once
again. It is advised to continue to keep fresh purchases highly stock specific
and maintain cautious outlook for the day.
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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