Thursday, August 25, 2016

Daily Market Trend Guide -- Thursday, August 25, 2016

MARKET TREND FOR THURSDAY, AUGUST 25, 2016
While consolidating over previous week, the Markets have continued to display good amount of inherent strength and it ended the day once again on a positive note after recovering from the low point of the day. Today, we enter the expiry of the current derivative series and the Markets poise themselves at a critical point so far as current congestion zone is concerned. We expect the Markets to open on a modestly positive note and look for directions in the initial trade. If the Markets are able to sustain its expected opening gains, then we may see the Markets attempting to move out from the congestion zone.

For today, the levels of 8700 and 8730 will continue to act as immediate resistance levels for the Markets. The supports come in at 8620 and 8575 levels.

The RSI—Relative Strength Index on the Daily Chart is 56.6102 and it remains neutral as it shows no bullish or bearish divergence or any failure swings. The Daily MACD stays bearish as it continues to trade below its signal line. On the Candles,  a Doji Star  and  a long lower shadow  occurred. Though it requires confirmation, it certainly has a potential to halt the decline and create some possibility for a up move. However, as just mentioned, this requires confirmation.

On the derivative front, heavy rollovers continued as the NIFTY August futures shed over 30.56 lakh or 24.75% in Open Interest whereas the September futures added over 29.80 lakh shares in Open Interest. The NIFTY PCR stands at 1.04 as against 0.99 yesterday.

Coming to pattern analysis, the Markets have spent the enter week trading sideways in a range bound trajectory after the up move was halted at 8728 levels which act as immediate top for the Markets. As mentioned often in our previous editions, no sustainable up move shall occur until the Markets moves past the 8700-8730 resistance levels. Having said this, we have also been mentioning that the corrective activity of the Markets will remain in the form of limited downsides, intermittent selling bouts and a sideways range bound movement. Markets have traded very much on these analyzed lines.

Today’s expected positive opening is likely to see the Markets trying to move more towards 
its immediate resistance levels and subsequently move beyond that in coming days. However, the expiry is also likely to keep some good amount of volatility ingrained in the Markets. While avoiding shorts, we continue to reiterate our view to continue to make modest selective purchases while vigilantly protecting profits at higher levels.


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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