Monday, August 8, 2016

Daily Market Trend Guide -- Monday, August 08, 2016

MARKET TREND FOR MONDAY, AUGUST 08, 2016
The Markets saw a robust pullback after four days of consolidation and ended the day on a fresh 52-week high on Closing basis. Today as well, we can fairly expect the Markets to open on a positive note and there are high chances that its tests its fresh 52-week high once again and moves past its previous immediate high of 8711. The key would be to see if it sustains its expected opening gains and builds on that. If it does, we can see the Markets tracking the upper end of the rising channel again.

For today, the levels of 8710 and 8745 will act as immediate resistance levels for the Markets.  The supports come in at 8650 and 8615 levels.

The RSI—Relative Strength Index on the Daily Chart is 65.2523 and it shows no failure swings. However, the NIFTY has made a fresh 52-week high but RSI has not and this shows 
Bearish Divergence on the Daily Charts. The Daily MACD stays bearish as it continues to trade below its signal line. On the Weekly Charts, the Weekly RSI is 69.2181 and it has reached its highest value in last 14-period which is bullish. It does not show any bullish or bearish divergence. The Weekly MACD remains bullish as it trades above its signal line.

On the derivative front, the NIFTY August futures have added over 2.46 lakh shares or 1.04% in Open Interest. The NIFTY PCR stands at 0.97 as against 0.88 on Friday.

Coming to pattern analysis, with the Friday’s pullback, the Markets have once again brought itself back into the upward rising channel drawn from February lows. However, the band of the channel is continuing to narrow and the Markets are expected to track the upper end of this channel. However, it becomes important to note that the Markets have high probability to marking fresh 52-week highs but in the same breath, it would be equally critical to see if it sustains and builds on the opening gains and capitalizes later. If it does so, then the Markets may test the next logical targets of  8765 and 8800 in coming sessions.

RBI comes up with the Credit Policy review tomorrow and the rates are expected to remain unchanged. The Markets have discounted a no hike in the rate and other thing would be a news factor for the Markets. We reiterate to continue to make stock specific purchase at any levels with any dip and equally continue to use up moves to protect profits at higher levels. The inherent structure of the Markets remains intact. Positive outlook 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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