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
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