Friday, June 3, 2016

Daily Market Trend Guide -- Friday, June 03, 2016

MARKET TREND FOR FRIDAY, JUNE 03, 2016
The Markets displayed excellent strength as after five days of straight gains and just two days of consolidation, it went on to add yet another day of gains. Today, the Markets are once again expected to open on a positive note and look for further gains. Speaking purely on technical grounds, the Markets are tracking the rising trend line drawn and with each passing day, the pattern resistance levels also keep rising.  Given this structure, likely levels of 8280-8300 on the Markets cannot be ruled out.

For today, the levels of 8265 and 8300 will act as immediate resistance levels for today. The supports come in at 8180 and 8150 levels.

The RSI—Relative Strength Index on the Daily Chart is 70.7186 and it now trades at overbought levels above 70. Though it does not show any bullish or bearish divergence, it has reached its highest value in last 14-days which is bullish. The Daily MACD stays bullish as it trades above its signal line.

On the derivative front, the NIFTY June futures have 20,250 shares or 0.09% in Open Interest. The change in OI remains negligible and overall build up continue to remain on the long side.

Coming to pattern analysis, the Markets broke out from a month-long consolidation formation after taking support at 200-DMA for couple of times and after breaking out on the upside, the Markets posted some 450-odd points of gains. After consolidating for just two days, the Markets have attempted to further its gains again and the next logical levels that the Markets can test are 8280-8300. However, given the overbought nature of the Markets, some amount of resistance cannot be ruled out from higher levels.

Overall, the inherent bias of the Markets continue to remain strong and on upside. However, some caution will have to be exercised given the overbought nature of the Markets. Again, given the inherent bullish undertone, shorts should be strictly avoided. While selective purchases may be made, any levels of above of 8250 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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