MARKET TREND FOR TUESDAY, AUGUST 16, 2016
The markets will reopen today after a holiday following Independence
Day yesterday. Today, we can fairly expect the Markets to open on a flat to
mildly positive note and look for directions. Speaking purely on technical
grounds, the Markets are expected to open stable and positive and continue with
the up move at least in the initial trade. However, the Markets are under
consolidation and the levels of 8700-8725 zones will continue to pose major and
important resistance to the Markets.
Today, the levels of 8705 and 8725 will act as immediate
resistance levels for the Markets. The supports come in at 8630 and 8610
levels.
The RSI—Relative Strength Index on the Daily Chart is
60.1510 and it 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 Weekly Charts, the Weekly RSI is 68.7229 and this too remains
neutral as it shows no bullish or bearish divergence or any failure swings. The
Weekly MACD remains bullish trading above its signal line. On the Candles on
the Weekly Charts, a Hanging Man formation has occurred for the second
consecutive week. Though this may not be a classical Hanging Man formation, it
has potential enough to halt the up move. However, this always requires
confirmation.
On the derivatives front, the NIFTY August futures have shed
over 8.75 lakh shares or 3.43% in Open Interest. This makes quite evident that
the rise that we saw on Friday was more on account of short covering.
Coming to pattern analysis, the Markets have broken out of
the rising channel formation, a channel that is drawn from the February lows.
As mentioned often in our previous editions, this channel was getting narrower
and a sharp movement on either side was not ruled out.
Currently with the
channel getting narrower, the Markets showed a downward breach, only to move up
again. However, it still continues to trade below and outside the said channel.
Further, while having a look at the Weekly Charts, the pattern clearly suggests
potential halting of the uptrend. Though this remains a high possibility, this
always requires a confirmation on the next weekly bar.
Overall, given the above facts, it is very much evident that
the Markets are very less likely to give a runaway rise on the upside. In case
of such runaway rise, the sustainability of such rise would be questionable.
The Markets are likely to continue to remain in corrective mode. However, given
the inherent buoyancy of the Markets, such corrective actions will be
characterized with limited downsides and more of range bound sideways
movements. The stocks / sectors that underperformed over previous two weeks are
likely to lead. Overall, we continue to reiterate to use dips to make selective
purchases at lower levels.
Milan Vaishnav, CMT
Technical Analyst
Member: Market Technicians Association, (MTA), USA
Member: Association of Technical Market Analysts, (ATMA), INDIA
+91-98250-16331
No comments:
Post a Comment
Note: Only a member of this blog may post a comment.