MARKET TREND FOR TUESDAY, MAY 24,
2016
The Markets witnessed terrible amount of
volatility yesterday as it swung 200-points both sides in total before ended
the day with modest losses. Today, we can expect the Markets to see a quiet
opening again but the analysis will continue to remain on similar lines. The Markets
have been taking support on its 50-DMA which stands at 7730 today since last
2-3 days and this level will be critical to watch out for. Any significant
slippage below this level can induce some more weakness in the Markets.
For today, the levels of 7765 and 7810 will
act as immediate resistance levels for the Markets. The supports come in at
7710 and 7650 levels.
The RSI—Relative Strength Index on the
Daily Chart is 45.35 and it does not show any failure swing. The NIFTY has
formed a fresh 14-day low but RSI has not and this is Bullish Divergence. The Daily
MACD stays bearish as it trades below its signal line.
On the derivative front, rollovers
continued as the NIFTY May futures shed over 10.05 lakh shares or 6.44% in Open
Interest while June futures added over 28.21 lakh shares or 77.25% in Open
Interest. The NIFTY PCR stands at 0.83 as against 0.86.
Coming to pattern analysis, as mentioned
often in our previous edition, the Markets have given a downside breach from a
symmetrical triangle formation on the Daily Charts. While doing so, it took
support at its 200-DMA couple of times and after this breach, this very same
level of 200-DMA which stands at 7795 will act as resistance for the Markets. However,
the 50-DMA, which is 7730 has been acting as support since two days and this
level would be critical to watch out for. If the Markets breach this level, we
will see some more weakness in the Markets in the immediate short term. However,
there has been no structural breach on the Daily Charts and this remains a
normal correction. The RSI has stayed within its formation and has not formed a
fresh low indicating some resistance to major downsides.
Overall, it is important to note that the
Markets have done nothing that warrants a structural breakdown. However, we
will continue to see some more corrective activities and unless the Markets
moves back above its 200-DMA all up moves should be utilized to protect
existing profits. While avoiding shorts and keeping fresh purchases at moderate
levels cautious outlook is advised on the Markets.
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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