MARKET TREND FOR FRIDAY, MAY 06, 2016
Markets remained thoroughly volatile as
expected and ended the day with minor gains. Today, we can once again expect a
negative start to the Markets and we can certainly expect some amount of
weakness to return again as the Markets are likely to test its pattern supports
in the immediate short term. Today, with the negative start expected once
again, it will not be a surprise if we see some ranged weakness persisting in
the Markets. Any up moves, shall remain limited with good amount of volatility
remaining ingrained in it.
For today, the levels of 7775 and 7810 will
act as immediate resistance levels for the Markets. The levels of 7705 and 7670 will act as immediate
supports.
The RSI—Relative Strength Index on the Daily
Chart is 49.4172 and it remains neutral as it shows no bullish or bearish
divergence or any failure swings. The Daily MACD stays bearish as it trades
below its signal line.
On the derivative front, the NIFTY May futures
have over 9.39 lakh shares or 4.89% in Open Interest. This number continues to
show good amount of unwinding of long positions in the Markets. The NIFTY PCR
stays unchanged.
Coming to pattern analysis, the Markets
have breached its 200-DMA which stands at 7837 and this level will continue to
pose resistance to the Markets in the immediate short term. On the medium
to long term, there has been slight
improvement in the structure as the 50-DMA has shown a positive crossover to
100-DMA as it has moved above the 100-DMA. However, given a immediate short
term view, the Markets are likely to remain ranged and in any case of weakness
persisting, the Markets may test its pattern supports of 7670 levels. Any
breach below that will induce some more weakness.
All and all, the Markets are likely to
remain in a range and movement on either side is likely to remain capped and
good amount of volatility is likely to remain ingrained in it. NIFTY, per se,
remains in a no-trade zone as it is in short term corrective mode hovering
around its support levels. It is advised to utilize dips, if any to make very
short term selective purchases. More liquidity should be maintained while
adopting a cautious outlook on the Markets.
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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