Monday, July 18, 2016

Daily Market Trend Guide -- Monday, July 18, 2016

MARKET TREND FOR MONDAY, JULY 18, 2016
The Markets consolidated on Friday after it retraced from the opening highs of the day to end the day with mild losses while remaining in range bound trajectory. Today’s analysis continues to remain on similar lines. The Markets are expected to see a quiet to positive opening and it is very much likely to see itself consolidating in a capped range while continuing to display inherent strength and buoyancy. It is likely to test its upper rising trend line resistance and it is also likely that the Markets continue to face corrective pressure at higher levels.

The levels of 8590 and 8625 will act as immediate resistance levels for today. The supports come in at 8510 and 8475 levels.

The RSI—Relative strength Index on the Daily Chart is 69.8871 and it has just crossed below a topping formation. It does not show any bullish or bearish divergence or failure swings. The Daily MACD stays bullish as it trades above its signal line.

On the derivative front, the NIFTY July futures have further added over 4.58 lakh shares or 2.08% in Open Interest. The NIFTY PCR stands at 1.06 as against 108 on Friday.

Coming to pattern analysis, the Markets have been displaying great amount of strength post its breakout from 8295 levels. After each rise, what we have been witnessing are just intraday corrective bouts and a range bound consolidation. The Markets continues to remain in a upward rising channel drawn from the February lows and it is expected that if the Markets continue to keep tracking its upward rising trend line, then the logical targets of 8600-8625 cannot be ruled out. However, at any given point of time, the Markets will continue to remain vulnerable to intraday selling bouts or ranged consolidation at higher levels.

Overall, the Markets have been driven by a tactical shift towards equity following sharp decline in bond yields abroad. Given the technical structure of the Charts, the Markets continue to remain vulnerable to selling bouts at higher levels but it continues to remain inherently strong and buoyant. Any decline should be used to make quality purchases. Sector specific out performance shall continue. Shorts should be avoided and cautious optimism is advised or today.


Milan Vaishnav, CMT
Technical Analyst

Member: Market Technicians Association, (MTA), USA
Member: Association of Technical Market Analysts, (ATMA), INDIA

+91-98250-16331

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