MARKET TREND FOR WEDNESDAY, JUNE 01,
2016
While trading precisely on expected lines,
the Markets showed signs of fatigue at higher levels and ended with minor
losses after five days of straight gains. Today, we can once again expect the
Markets to open on a modestly positive note. The Markets will positively react to
the decent GDP numbers that we got yesterday but this will not change the technical
outlook on the Markets. The Markets will continue to remain under corrective
pressure at higher levels and this keeps our analysis on similar lines that of
yesterday.
For today, the levels of 8200 and 8235 will
act as immediate resistance for the Markets .The Supports come in lower at 8130
and 8075 levels.
The RSI—Relative Strength Index on the
Daily Chart is 68.2992 and it remains neutral as it shows no bullish or bearish
divergence or failure swings. The Daily MACD stays bullish as it trades above
its signal line. On the Candles, an Engulfing Bearish Line has occurred.
Since this has occurred after a significant up move, it marks a potential top
for the Markets in the immediate short term. It will require confirmation
today.
On the derivative front, the NIFTY June
futures have shed 65,700 shares or nominal 0.30% in Open Interest.
Coming to pattern analysis, the Markets
broke out on the upside after consolidating in a triangle formation and having
done this, it has achieved its technical targets of testing 8200 levels post
breakout. We had mentioned logical targets post this break outs using measuring
implications in our one of previous editions. Now, there are chances that we
might see a positive opening some more up move while the Markets reacts to the
positive news flow on the Domestic GDP front, but the zones of 8200-8235
continues to remain a important resistance zone for the Markets given many
factors. It is a zone wherein the Markets can fact pattern resistance and it is
the 61.8% retracement zones using Fibonacci. Given these facts the vulnerability of the
Markets at higher levels continues to exist today as well.
Overall, we might see a range bound trade
today. Volatility may continue to exist and some
up moves may also be seen.
However, the Markets remain due for a minor correction and given this fact some
amount of consolidation at higher levels cannot be ruled out. While continuing
to protect profits at higher levels, 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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