MARKET TREND FOR WEDNESDAY, AUGUST 31, 2016
Keeping in line precisely as analyzed, the Markets staged a
decent up move yesterday and attempted to move past its immediate high of 8728
levels while trying to break out of the consolidation zone. Today, we can
expect the Markets to open flat and deliberate a bit around 8728 levels but the
undercurrent continue to remain strong. Even if the Markets consolidate a bit
around these levels, it is likely to show very limited corrective activity and is
likely to demonstrate strength as it has done yesterday.
For today, the levels of 8775 and 8800 will act as immediate
resistance levels for the Markets. The supports come in at 8690 and 8665
levels.
The RSI—Relative Strength Index on the Daily Chart is
62.5865 and it has reached its highest value in last 14-days which is bullish.
It does not show any bullish or bearish divergence or any failure swing. The
Daily MACD still continues to remain bearish as it trades below its signal
line. On Candles, the big white candle that has appeared near the breakout area
tends to lend credibility to the breakout. At the same time, a rising window
that has occurred usually implies continuation of bullish trend.
On the derivative front, the NIFTY September futures have
added over added nearly 9.68% in Open Interest. This implies creation of short
positions in the Markets. Also, the NIFTY PCR has risen to 1.06 as against 1.05
yesterday.
Coming to pattern analysis, the Markets remained in upward
rising channel since February lows until the beginning of August. However, this
Channel was broken as the Markets formed its immediate top at 8728 levels.
However, this consolidation turned into limited downsides as the Markets saw
just intermittent selling bouts but remained sideways for most part of this
month while oscillating around keeping the level of 8520-8550 as sacrosanct
support. Yesterday, the Markets have attempted to move past this level and it
would be important to see if the Markets continue with its up move it initiated
yesterday.
Overall, though buoyant trend is expected to continue, in
event of any consolidation once again, the levels of 8690-8740 will be critical
to watch out for. The Markets are at the most likely to oscillate in a given
capped range before it moves up again. It is best advised to continue to make
selective purchases in event of any consolidation and grossly avoid shorts.
Overall, positive outlook is advised for today.
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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