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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