MARKET TREND FOR WENDESDAY, MAY 04,
2016
Though the Markets had a better than
expected first half of the session yesterday, it continued to resist at its
200-DMA very much on expected lines and ended yet another day with losses.
Today, we can expect the Markets to open again on a lower note and trade
negative at least in the initial trade. The Markets are expected to continue to
show weakness and in event of any upswings, the 200-DMA which is 7843 will
continue to pose resistance.
For today, the levels of 7775 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 50.0089 and it has reached its lowest level in last 14-days
which is bearish. The RSI has made a fresh 14-period low while NIFTY has not
yet and this is Bearish Divergence. The Daily MACD stays bearish as it trades
below its signal line.
On the derivative front, the NIFTY May
futures have 17,100 shares or nominal 0.09% in Open Interest. This figure
remains nominal and NIFTY PCR stands at 0.86 as against 0.90 yesterday.
Coming to pattern analysis, the Markets
finally gave up its support of 200-DMA after oscillating in a 140-odd points
range with the support of 200-DMA and the upper band of 7980. Having said this,
it is important to note that with the Markets now slipping below 200-DMA level,
any upswings will continue to face resistance at this level. In case of
weakness continuing, it is likely to test its multiple support levels around
7600-7550 levels. These levels have 2 of its DMAs converging and also has a
pattern support around these levels. Even if the Markets tests these levels, there won’t be any significant breach
of trend that the Markets have formed after forming lows around 6800 in
February. It is also important to note that any further breach below this will
dent the reversal of the Markets and will have some structural damage to the
Charts.
Overall, it would be important to observe
Market’s behavior around 200-DMA in case of any up move and around 7550 in case
of further weakness. It is likely that the Markets will see some intermittent selling
bouts from higher levels and we continue to advice to utilize these up swings
below 200-DMA for booking profits and protecting existing positions. Volatility
will continue to remain ingrained in the Markets. Continuance of cautious
outlook is advised for today.
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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