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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