MARKET TREND FOR TUESDAY, AUGUST 3, 2016
The Markets continued to correct yesterday much on expected
lines while it ended the day with modest losses while making a lower high for
itself. Today, we expect the Markets to continue to remain in corrective mode
and also continue to consolidate while the mentioned levels will continue to
act as immediate resistance for the Markets. While there is no structural
breach on the Daily Charts, we expect the Markets to open flat with a slight
negative bias and look for directions.
For today, the levels of 8680 and 8725 will act as immediate
resistance levels for the Markets. The supports come in at 8605 and 8565
levels.
The RSI—Relative Strength Index on the Daily Chart is
54.8347 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 derivative front, the NIFTY August futures have shed
over 50.47 lakh shares or 21.75% in Open Interest while September futures added
over 57.32 lakh shares or 110.55% in Open Interest as heavy rollover centric
activity continued. The NIFTY PCR stands at 0.97 as against 1.06 yesterday.
Coming to pattern analysis, after forming an immediate top
at the levels of 8728, the Markets have now turned sideways and have remained
in consolidation stage for couple days now. Though the Markets have shown no
structural damage or any major decline, the fatigue has once again become
visible on the Charts. There will be no significant sustainable up move unless
the Markets moves past the 8700-8728 resistance / congestion zone. However, at
the same time, with the overall structure and long term trend remaining buoyant,
the corrective activities are expected to remain limited to intermittent
selling bouts and sideways range bound movements.
Overall, given the overall structure of the Markets, no
major downsides are expected but at the same time it is very much likely that
the Markets remain in corrective mode. It is important to note that with the
inherent buoyancy, we continue to reiterate our view to avoid any major
shorting in the Markets. Also, some fresh shorts positions are visible and this
may aid the Markets at lower levels. Overall, continuing to use the dips to
make selective purchases is advised while maintaining a positive caution on 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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