MARKET TREND FOR MONDAY, MAY 16, 2016
The Markets are poised at a critical
juncture and the analysis for today continues to remain on similar lines that
of Friday. The Markets are likely to see a quiet and modestly negative opening
and would look for directions. The Markets have made a lower low after forming
a intermediate top of 7970 levels and currently rest at its 200-DMA which is
7915.99 today. Any opening below this will have the levels of 200-DMA acting as
resistance and it would be critically
important for the Markets to try and trade above its 200-DMA to continue to
remain under consolidation and avoid any downward breach.
For today, the levels of 7845 and 7890 will
act as immediate resistance levels for the Markets. The supports come in lower
at 7765 and 7720 levels.
The RSI—Relative Strength Index on the
Daily Chart is 52.52 and it remains neutral as it shows no bullish or bearish
divergence or failure swings. The Daily MACD remains bearish as it trades below
its signal line. On the Weekly Charts, the Weekly RSI is 52.59 and this too
remains neutral without showing any bullish or bearish divergence. The Weekly
MACD is bullish as it trades above its signal line.
On the derivative front, the NIFTY May
futures have shed yet another 7.57 lakh shares or 4.44% in Open Interest. The NIFTY
PCR stands at 0.88 today.
Coming to pattern analysis, after reversing
its trend from the February lows, the Markets moved past all of its DMAs and
formed its intermediate top in the zones of 7970-7990 levels. Having said this,
since last couple of sessions, the Markets have formed a symmetrical triangle
formation and this formation can act both as a continuation pattern as well as
reversal in some cases. The RSI on Daily Charts too has reported a lower high
and currently is within that formation. Having said this, it would be crucially
important for the Markets to trade above 200-DMA which stands at 7815 today in
order to avoid any weakness. On the Weekly Charts as well, the Markets have
resisted to a falling trend line pattern resistance drawn form 8600-levels.
Overall, in given circumstances, if the Markets see a downward breach it will
also see itself breaching on the downside from this symmetrical triangle
formation as well as 200-DMA and this will bring some more weakness in the
Markets, at least in the immediate short term.
Overall, having said this, while watching
the behavior of the Markets vis-à-vis the levels of 200-DMA, we reiterate a
caution in the Markets once again and no major purchases should be made until
the Markets sees a significant up move above 7950 levels. Until this happens we
are likely to see all up moves getting sold into and in any case of downward
breach, the levels of 7700-7650 cannot be ruled out. Maintaining liquidity
along with cautious outlook is advised for today.
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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