MARKET TREND FOR THURSDAY, MAY 19,
2016
Markets continued to consolidate and
continued to seek support at its 200-DMA and managed to keep its head above it
yesterday. Today, the Markets are likely to see a negative opening once again
and the analysis would continue to remain once again on similar lines like
yesterday. The Markets continue to remain in symmetrical triangle formation and
moving towards its apex and this is likely to see either trading range
remaining extremely capped or Markets finally taking a directional call for the
immediate short term.
For today, the levels of 7890 and 7935 will
act as immediate resistance levels for the Markets. The supports come in at
7805 and then at 7740 levels.
The RSI—Relative Strength Index on the
Daily Chart is 55.59 and it remains neutral as it shows no bullish or bearish
divergence. The Daily MACD stays bearish as it trades below its signal line.
On the derivative front, the NIFTY May
futures have shed yet another 5.12 lakh shares or 3.09% in Open Interest. The
NIFTY PCR stands at 0.99 as against 0.96 yesterday.
Coming to pattern analysis, the Markets
have continued to remain in symmetrical triangle formation. Further to this, it
is under this formation for quite a time now and has moved more towards apex.
Usually, if a breakout on either side is not achieve around 75% distance from
apex, the intensity or effectiveness of the breakout reduces by nearly a high
and this has adverse effects, especially on the upside breakouts. Having said
this, the RSI too remains under such formation and has not formed a higher high
as well. Overall, there are chances that the Markets may see some short term
weakness coming in. In any case, the upside will continue to face stiff
resistance around 7970-7990 zones.
Overall, the Markets will have to watch
itself vis-à-vis the levels of 200-DMA which stands at 7805 today. Any breach
below this will see some more weakness creeping in. It is also important to
note that the Markets are overdue to take a directional call and volatility on
either side cannot be ruled out. While continuing to keep analysis on yesterday’s
line, making moderate purchases while vigilantly guarding profits at higher
levels 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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