MARKET TREND FOR TUESDAY, JULY 26,
2016
The Markets finally attempted a breakout
after several days of range bound consolidation and ended the day with decent
gains. Speaking purely on technical grounds, the Markets are likely to open on
a modestly positive note and continue with its up move. However, though this is
most likely to happen, the Markets have become overbought once again and
therefore some amount of consolidation happening again at higher level cannot
be ruled out. Liquidity has been chasing the Markets and this is likely to
continue to happen in the immediate short term.
For today, the levels of 8650 and 8710 will
act as immediate resistance levels for today. The supports come in at 8590 and
8525 levels.
The RSI—Relative Strength Index on the
Daily Chart is 70.0686 and it now once again trades in “overbought” territory.
Though it does not show any failure swing, the NIFTY has formed a fresh 14-day
while RSI has not and this has caused Bearish Divergence. The Daily MACD stays
bullish as it continues to trade above its signal line.
On the derivatives front, the rollovers
became more evident as the NIFTY July futures shed over 18.33 lakh shares or
7.88% in Open Interest. The August series added over 31.85 lakh shares or
87.84% in Open Interest resulting in net addition in Open Interest. The NIFTY
PCR stands at 1.10 as against 1.08.
Coming to pattern analysis, though the
Markets have attempted to move out and give a breakout on the upside from the
severe consolidation that it witnessed over previous week, it has now also
shown some signs of weariness and fatigue on the Daily Charts. If the breakout
is successful and the Markets continue to surge ahead, it would still continue
to track the upper rising trend line of the channel drawn from February lows
and it might test the 8700-8725 levels. However, the signs of fatigue are
little evident and some minor corrections from higher levels cannot be ruled
out.
Markets will also watch FOMC meet that
begins today though rate hikes for 2016 stand ruled out. The Markets trade in “overbought”
territory and the lead indicators showing bearish divergence may decrease the
momentum of the Markets going upward. It is advised to make selective buying but
more emphasis should be used to exit and protect profits with each up move.
Positive caution is advised for 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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