MARKET TREND FOR FRIDAY, OCTOBER 07, 2016
In our yesterday’s edition, we had mentioned about the
domestic equity markets remaining vulnerable to a profit taking bout from
higher levels. While trading precisely on the analyzed lines, the NIFTY came
off from its intraday highs by nearly 97-odd points to finally end the day with
modest losses. Today, we expect a stable opening but also expect that the
choppiness and volatility would continue to persist. The NIFTY continues to
trade inside the Descending Triangle formation but the neckline support levels
of 8690 also coincides with 50-DMA which is 8704. These two levels will
continue to act as a major support for the Markets.
For today, the levels of 8745 and 8800 will act as immediate
resistance levels whereas the supports will come in at 8690 and 8620 levels.
The RSI—Relative Strength Index on the Daily Chart is
48.6811 and it remains neutral showing no failure swings or any bullish or
bearish divergence. The Daily MACD continues to remain bearish while trading
below its signal line.
On the derivative front, the NIFTY October futures have shed
over 2.07 lakh shares or 0.93% in Open Interest.
While having a look at pattern analysis, though it remains
very much evident that the Markets continue to remain trapped in a small
Descending Triangle formation, it hangs precariously in a manner that will
cause the NIFTY to take a sharp directional bias in coming days. The neckline
levels of this formation is 8690. If the NIFTY breaches this level, we will see
some more weakness coming in. On the other hand, this neckline level, as
mentioned above, also coincides with the 50-DMA levels which stands at 8704.
This is expected to act as important support for the Markets at Close levels.
All and all, today the session is likely to remain volatile
and on the upper side, the levels of 8800 will continue to pose stiff
resistance. In the same breadth, the level of 8690 will be the critical level
to watch out for NIFTY will have to trade above this to avoid any weakness.
Stock specific purchases may be down but all up moves should be utilized to
protect profits as intermittent selling bouts still cannot be ruled out at
higher levels.
Milan Vaishnav, CMT
Technical Analyst
(Research Analyst, SEBI Reg.
No. INH000003341)
Member:
Market Technicians Association, (MTA), USA
Canadian Society of Technical Analysts, (CSTA), CANADA
Association of Technical Market Analysts, (ATMA), INDIA
http://milan-vaishnav.blogspot.com
+91-98250-16331
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