MARKET TREND FOR THURSDAY, AUGUST 11, 2016
Markets showed some serious signs of correction yesterday
and this very much remained on expected lines as it was explicitly showing
signs of fatigue as mentioned in our previous editions. With yesterday’s correction, the Markets have established the levels of
8700-8715 as intermediate top for the Markets in the immediate short term. We
will not see any serious up move in the Markets until these levels are
comprehensively breached. Today, we can expect the Markets to show a modestly
positive opening however, the mentioned levels will continue to act as
resistance.
For today, the levels of 8630 and 8695 will act as immediate
resistance levels for the Markets. The supports come in at 8520 and 8480
levels.
The RSI—Relative Strength Index on the Daily Chart is
53.6301 and it has reached its lowest value in last 14-days which is bearish.
Also, the RSI has set a fresh 14-period low whereas NIFTY has not yet and this
is Bearish Divergence. The Daily MACD stays bearish as it trades below its
signal line. With the Big Black Candle occurring it has established the
credibility of the resistance area of 8700-8715 levels.
On the derivatives front, the NIFTY August futures have
added over 9.24 lakh shares or 3.75% in Open Interest. The NIFTY PCR stands at
0.94 as against 0.98.
Coming to pattern analysis, the Markets have broken on the
downside of the upward rising channel drawn from February lows. We had
categorically mentioned in our yesterday’s edition that the Channel has been
growing narrower with each passing day and because of this some sharp either
side movements in the Markets cannot be ruled out. With yesterday’s decline, as
mentioned earlier, the Markets have established the levels of 8700-8715 as its
immediate top in the coming short term. We will not see any runaway up moves
until these levels are breached comprehensively. However, there are chances
that we will see some range bound consolidation rather than any major declines
as inherent structure of the Markets continue to remain intact.
Overall, some amount of weakness might persist in the Markets.
But given the fact that there is no structural damage on the Charts, the
corrective actions might get restricted to limited declines and range bound
movements. It is advised now to use every possible dip to make selective purchases.
A selective approach with 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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