Thursday, May 26, 2016

Daily Market Trend Guide -- Thursday, May 26, 2016

MARKET TREND FOR THURSDAY, MAY 26, 2016
Yesterday’s strong up move has thoroughly altered the short term structure of the Daily Charts. The Markets have now moved well beyond its 200-DMA and has further inched near its resistance zones of 7970-7990 levels. Today, we will again see some modestly positive opening and will see if the Markets achieve an breakout on the upside. The Markets will also remain heavily dominated with rollovers as today is the expiry of current derivative series.

The levels of 7990 and 8035 will act as immediate resistance levels for today. The supports come in much lower at 7910 and 7860 levels.

The RSI—Relative Strength Index on the Daily Chart is 59.4248 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 is still bearish as it trades below its signal line.

On the derivative front, the NIFTY May futures have shed over 21.61 lakh shares or 15.81% in Open Interest. The June futures added over 62.30 lakh shares or 71.99% in Open Interest.

Coming to pattern analysis, with the yesterday’s strong up move, the overall structure of the Daily Charts have altered a bit. The Markets still continue to remain in a triangle formation but its range is widened and also because of that, it trades exactly around 3/4th of its apex. Having said this, it has also moved past its 200-DMA yesterday and now trades around its pattern resistance. Any higher opening today will result into an attempted breakout for the Markets on the up side if they open positive and manage to sustain above that.

Overall, the Markets rest at interesting juncture. Speaking purely on technical lines, the Markets are likely to see a modestly positive opening and if it capitalizes on this, it may achieve a possible breakout on the upside. However, the opening levels and some advancement will take the Markets around its resistance zones of 7970-7990 levels and it would be critically important to see how the Markets deals with these levels. While continuing to avoid shorts even at higher levels, selective purchases may be made.


Milan Vaishnav,
Consulting Technical Analyst

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

+91-98250-16331

No comments:

Post a Comment

Note: Only a member of this blog may post a comment.