MARKET TREND FOR MONDAY, JULY 04.
2016
We draw your attention to our edition dated
June 24th, wherein we had categorically mentioned that though
knee-jerk reaction to the Brexit would be inevitable, we will see the technical
factors taking over and the Markets will see this as a huge buying opportunity.
Today, five sessions later, the Markets have not only recovered those early
losses but have ended above pre-brexit levels. Today, we are slated to see one
more positive opening today and we will see the Markets touching fresh 2016
highs. However, given the current technical structure of the Markets, it would
be important to see if the Markets maintain its expected opening levels.
For today, the levels of 8350 and 8410 will
act as immediate resistance levels for the Markets. The supports come in at
8305 and 8245 levels.
The RSI—Relative Strength Index on the
Daily Chart is 63.1134 and it has reached its highest value in last 14-days
which is bullish. It does not show any bullish or bearish divergence. The Daily
MACD is still bearish as it trades below its signal line.
On the derivative front, the NIFTY July
futures have 3.29 lakh shares or 1.79% in Open Interest. This shows some more addition
in long positions in the system.
Now coming to pattern analysis. The Markets
have not only managed to recover all of its losses that it recorded on June 24th,
but has managed to move past its previous immediate top / resistance zone of
8285-8300 levels. It attempted a breakout on Friday as it moved past these
levels and today as well, we will see the markets scaling fresh 2016 highs on
back of expected positive opening. However, though we can certainly say that
the logical target for the Markets can be 8550-8600 levels in the immediate
short term if we extend the channel drawn from the February lows, some amount
of consolidation or mild profit taking cannot be ruled out. However, if this
happens, it would be in fact healthy for the Markets as its overall structure
continues to remain buoyant.
Overall, after posting five days of
straight gains, the Markets are slated for a positive opening once again.
However, in the same breath, some amount of profit taking / consolidation at
higher levels cannot be ruled out. In fact, if this happens it would be little
healthy for the Markets in the immediate short term. It is advised to refrain
from shorts as any profit taking if it is seen is likely to remain much capped
and range bound as overall structure of the Markets continue to remain buoyant.
Milan Vaishnav,
CMT
Consulting Technical Analyst
Member: Market
Technicians Association, (MTA), USA
Member: Association of Technical
Market Analysts, (ATMA), INDIA
+91-98250-16331
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