MARKET TREND FOR FRIDAY, AUGUST 05, 2016
Markets traded precisely on expected lines yesterday as
though it opened higher, it came off immediately from its opening highs to end
day flat with minor gains. The levels of 8580-8600 acted as resistance
yesterday. Today, we are likely to see a positive start to the Markets but the
levels of 8600-8620 will continue to act as important pattern resistance to the
Markets on Daily Charts. The ECB has kick started stimulus and this QE will result
into risk assets continuing to remain in demand.
For today, the levels of 8580-8620 will act as immediate
resistance levels for the Markets. The supports come in at 8520 and 8460
levels.
The RSI—Relative Strength Index on the Daily Chart is
56.3817 and it remains neutral as it shows no bullish or bearish divergence or
any failure swing. The Daily MACD stays bearish as it trades above its signal
line.
On the derivative front, the NIFTY August has shed 2.88 lakh
shares or 1.20% in Open Interest. The NIFTY PCR stands at 0.88 as against 0.87.
Coming to pattern analysis, as mentioned in our yesterday’s
edition, the NIFTY has breached on the downside from the Channel that is drawn
from the February lows. The level of 8580 was important to watch out for as it
was the pattern support that the Markets breached on the downside. This level continued
to act as resistance yesterday as well. Given the rising nature of the level,
the levels of 8600-8620 will be critical to watch out for. Until the Markets
move past these levels in the immediate short term, we will see them in
corrective mode and they will continue to consolidate in a capped range.
Overall, with the levels of open interest addition witnessed
in Puts yesterday, even a small up move is likely to trigger a serious short
covering in the Markets. Over last 3-4 sessions, significant short positions
have been added in the system. Given this reading, caution obviously gets elevated
in the Markets. The Markets are likely to remain volatile and remain vulnerable
to intermittent selling from higher levels until some critical levels are
surpassed and the Markets get back into its upward momentum. Meanwhile which
accepting 8680-8700 as its immediate top, cautious approach should be continued
in the Markets.
Milan Vaishnav, CMT
Technical Analyst
Member: Market Technicians Association, (MTA), USA
Member: Association of Technical Market Analysts, (ATMA), INDIA
+91-98250-16331
No comments:
Post a Comment
Note: Only a member of this blog may post a comment.