MARKET TREND FOR Tuesday, May 3, 2016
After taking support on the 200-DMA which
stands at 7846 today, the Markets slipped a bit below that on yesterday’s
close. Today, we can once again expect the Markets to open on a quiet note and
look for directions. The analysis remains more or less on similar lines today
as well as the levels of 200-DMA will continue to pose resistance intraday as
well as at Close levels. The intraday trajectory that the Markets form would be
important to watch out for and any continuing weakness will see the Markets
testing 7775 and 7750 levels.
For today, the levels of 7820 and 7845 will
act as immediate resistance levels. The supports come in at 7775 and 7750
levels.
The RSI—Relative Strength Index on the
Daily Chart is 54.1632 and it remains neutral as it shows no bullish or bearish
divergence or any failure swing. The Daily MACD is bearish post reporting
negative crossover and it now trades below its signal line.
On the derivative front, the NIFTY May
futures have shed over 8.49 lakh shares or 4.11% in Open Interest. The NIFTY
PCR stands at 0.90 as against 0.94.
Coming to pattern analysis, the Markets
have retraced after forming an intermediate top at 7879 levels and have since
then made multiple attempts to move past it. While doing so it also tested its
200-DMA for multiple times and while oscillating in a 140-odd points range for
couple of days finally slipped below the 200-DMA. Though it continues to stay
within a filter, the level of 200-DMA will continue to pose resistance intraday
as well as at Close levels. In the immediate short term, the Markets may see
some weakness continuing and if the weakness persists, then it may test some
lower levels like 7750 and downwards. Having said this, if we take a intermediate
view, the Markets have so far formed a strong bottom around 6580 levels and
there would be no fear of reversal of trend so long as Markets trade above 7550
levels.
Overall, if we take a immediate short term
view, there are chances that we may see the Markets remaining range bound and
little weak while continuing to resist to 200-DMA. Purchases should be kept
selective and limited to defensives and up moves should be continued to be
utilized to protect profits. Continuance of positive outlook is advised for
today as well.
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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