Wednesday, August 3, 2016

Daily Market Trend Guide -- Wednesday, August 03, 2016

MARKET TREND FOR WEDNESDAY, AUGUST 03, 2016
The Markets held the immediate top levels of 8680-8715 intact as it continued to consolidate for the third day in a row while it ended its day yesterday with minor losses after coming off from its intraday highs. Today, we are once again expected to see a modestly negative start to the Markets. Today, GST bill will be tabled in the Upper House and its passing will have sentimental effect on the Markets though much of it has been priced in. On the lower side, the levels of 8550-8580 will be crucial to watch out for as they are one of the important pattern supports for the Markets.

For today, the levels of 8680 and 8715 will act as immediate resistance levels for the Markets. The supports are expected to come in at 8580 and 8550 levels.

The RSI—Relative Strength Index on the Daily Chart is 64.3547 and it remains neutral as it shows no bullish or bearish divergence or any failure swings. The Daily MACD stands bearish as it trades below its signal line.

On the derivative front, the NIFTY August futures have further gone on to add over 2.85 lakh shares or 1.27% in Open Interest. The NIFTY PCR stands further down at 0.91 as against 0.94 yesterday.

Coming to pattern analysis, as mentioned often in our previous editions, the Markets are currently well within the rising channel drawn from the lows it made in February. Having said this, though until now the Markets have been tracking the upper end of the Channel, the channel is narrowing and therefore a sharp movement on either side cannot be ruled out. While the Markets consolidate, the pattern support levels formed by the lower band of the channel fall at 8550-8580 range and any breach below these levels will see some more temporary weakness creeping in to the Markets. However, having said this, it also becomes important to note that the overall inherent structure of the Markets continues to remain buoyant and remains resilient to any major external events.

Overall, though we can expect a lower opening today, it is likely to get bought into at lower levels. Furthermore, even if we see some corrective activities in the Markets, the overall downsides are likely to remain limited. However, given the inherent technical structure of the Markets we will see some good amount of volatility remaining ingrained in the Markets and the Markets will continue to remain vulnerable to intermittent bouts at higher levels. While continuing with our view given yesterday, we reiterate cautious stand 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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