MARKET TREND FOR THURSDAY, AUGUST 18, 2016
Range bound consolidation continued in the Markets as it
continued to remain in sideways trajectory on Daily Charts while ending the day
with modest losses. Today as well, the Markets are expected to open on a flat
to modestly positive note and look for directions and this keeps our analysis
on similar lines that of yesterday. We will continue to see the Markets trading
in a well defined range while the levels of 8700-8725 will continue to act as
immediate top for the Markets for the near term.
For today, the levels of 8670 and 8700 will act as immediate
resistance levels for the Markets. The supports come in at 8610 and 8565
levels.
The RSI—Relative Strength Index on the Daily Chart is
55.7773 and this remains neutral as it shows no bullish or bearish divergence
or any failure swings. The Daily MACD stays bearish as it trades below its
signal line.
On the derivatives front, the NIFTY August futures have shed
over 2.56 lakh shares or 1.03% in Open Interest. This signifies some creation
of fresh short positions in the Markets again.
While having a look at pattern analysis, as mentioned often
in our previous editions, though the Markets have fallen out of the rising
channel that is drawn from the February lows, the corrective activity has been
in form of more of sideways range bound movements than any major downsides.
Keeping in line with this fresh pattern, we can fairly expect the Markets to
continue to exhibit limited downsides while at the same time, the levels of
8700-8725 will continue to act as important resistance and intermediate top for
the Markets. No sustainable up move shall occur until the Markets move past
this level.
Overall, any corrective activity, especially in the form of
a sideways movement is healthy for the Markets in the long term. While the
overall trend remaining intact and with the Markets continuing to exhibit
inherent buoyancy, we continue to reiterate the approach of using any intermittent
downsides to make selective purchases. Until the levels of 8700-8725 are
breached on the upside, all profits will required to be protected vigilantly
though major shorts should be avoided. More preservation of cash to make
selective purchases during dips should be done maintaining a positive caution
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
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