MARKET TREND FOR THURSDAY, AUGUST 04, 2016
The Markets finally corrected and tested its important
pattern supports levels while ending the day with losses. Today, we will see
the Markets reacting to the GST bill getting passed and might see some initial reaction
to it. Today, we can fairly expect to see a positive start to the Markets and
we will see Markets trading with gains at least in the initial trade. However,
while speaking purely on technical terms, it would be critical to see the
Markets trading above important levels of 8580 so as to be back again in the
trading channel.
Today, the levels of 8590 and 8635 will act as immediate
resistance levels for the Markets. The supports come in lower at 8510 and 8465
levels.
The RSI—Relative Strength Index on the Daily Chart is
55.8868 and it has reached its lowest value in last 14-days which is bearish.
Furthermore, the RSI has set a fresh 14-day low while NIFTY has not yet and
this is Bearish Divergence. The Daily MACD stays bearish as it trades below its
signal line.
On the derivative front, the NIFTY August futures have added
over 11.95 lakh shares or 5.24% in Open Interest. The NIFTY PCR stands further
down at 0.87 as against 0.91.
Coming to pattern analysis, the Markets not only tested its
lower pattern support of 8580-8560 but breached it as well yesterday. On its
way up the level of 8580 is likely to act a short term resistance. On the other
hand, it would be critically important for the Markets to bounce back and trade
above 8580 levels so as to be back in the Channel. With each passing day, this
level would increase given the rising nature of the channel. The lead
indicators suggest the Markets remaining in consolidation / minor correction
for some more time and the levels of 8675-8700 will remain sacrosanct as a
immediate top for the Markets in the immediate short term.
Overall, we will see some sentimental bounce back in the Markets
in the initial trade. The key would be to see if the Markets are able to capitalize
on this expected positive opening and move beyond 8580 levels. Failure to do
this will keep the Markets in corrective mode for some more time in the short
term, even though, the overall downsides remain limited. It is important to
note that volatility in the Markets will continue to remain ingrained and we
will continue to see stock specific
activities dominating the session.
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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