MARKET TREND FOR TUESDAY, MAY 31,
2016
The Markets are trading near its 8 month
high and at the same time have started to show some sign of fatigue at higher
levels. Today, the Markets are once again expected to start on a flat to mildly
positive note but at the same time the intraday trajectory will be important to
watch out for as there are chances that the Markets may witness some
consolidation from higher levels.
For today, the levels of 8210 and 8245 will
act as immediate resistance levels for the Markets. The supports come in much
lower at 8120 and 8060 levels.
The RSI—Relative Strength Index on the
Daily Chart is 69.8945 and it has reached its highest value in last 14-days
which is bullish. However, it is nearly overbought and it does not show any
bullish or bearish divergence. The Daily MACD is bullish as it trades above its
signal line. A Spinning Top on the Candles shows some potential fatigue
in the Markets.
On the derivative front, the NIFTY June
futures have added over 7.57 lakh shares or 3.62% in Open Interest. The bulk of
the OI remains on the long side, nearly to the extent of 82%.
Coming to pattern analysis, the Markets
have successfully broken out of the symmetrical triangle on the daily Charts.
Yesterday, it tested its technical target of 8200 as a intraday high. We had
mentioned often in our previous editions that a logical targets can be 8200
levels if the Markets breaks out of the triangle consolidation. Having said
this, it becomes important to note that the Markets have started to show some
signs of fatigue at higher levels and it should not be surprising if we see
some minor corrections from higher levels.
Overall, some consolidation from higher
levels cannot be ruled out. It is also important to note that the level of 8242
is the 61.8% retracement on Fibonacci from 9112-6825 correction and therefore
possibility of some correction setting in becomes even more likely. It is
likely that we see some brief but intermittent selling bouts from higher
levels. However, it is advised that shorts should be avoided at any levels and
any up moves should be utilized to book and protect profits.
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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