MARKET TREND FOR WEDNESDAY, MAY 25,
2016
The Markets took support on 50-DMA couple
of times yesterday and after oscillating in a tight range ended the day with
modest gains. The Markets have successfully kept its head above 50-DMA and
today we are likely to see a gap-up opening in the Markets. There are bright
chances that the Markets see a decently positive opening and look for
directions. The likely opening levels will see the Markets opening around its
200-DMA which stands at 7792 today and the behavior of the Markets vis-à-vis this
level would be critical to watch out for.
For today, the levels of 7792 and 7845 will
act as immediate resistance levels for the Markets. The supports come in at
7715 and 7680 levels.
The RSI—Relative Strength Index on the
Daily Chart is 46.8539 and it remains neutral as it shows no bullish or bearish
divergence or failure swings. The Daily MACD stays bearish as it trades below
its signal line.
On the derivative front, the NIFTY May
futures have shed over 9.52 lakh shares or 6.52% and June series added over
21.81 lakh shares or 33.70% in Open Interest resulting in net addition of OI. The
NIFTY PCR stands at 0.86 as against 0.83 yesterday.
Coming to pattern analysis, the Markets
have been in very tight trading range and have been oscillating in between its
DMAs for couple of days of time now. After remaining briefly in symmetrical
triangle formation for couple of days and while resisting to its 200-DMA, the
Markets gave a mild downside breach. However, it has managed to keep its head
above 50-DMA which stands at 7736, is likely to see a strong gap up opening
today. However, it becomes extremely important to note that the likely gap up
opening will see the Markets opening around its 200-DMA. Even if the Markets
moves past 200-DMA and manages to inch upwards 7835-7850 range, it will be
still within the pattern resistance levels.
Overall, it would be critically important
to see if the Markets are able to build up further on the expected positive
opening. For a fresh breakout to occur on the upside, the Markets not only will
have to move past the 200-DMA but will have to move past the resistance zones
of 7840-7850 as well. Until this happens, it will continue to oscillate in the
same tight range heading now where with good amount of volatility ingrained in
it. Emphasis should be continued to be
laid on protecting profits at higher levels until the mentioned levels are
breached on the upside.
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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