MARKET TREND FOR MONDAY, OCTOBER 17,
2016
The domestic equity markets witnessed a
range bound session on Friday and while it ended with very minor gains, the
vulnerability continued to remain very much visible on the Daily Charts. Today,
we might see a stable opening and some technical pullback as well but in any
case, the up moves are likely to remain limited and the level of 8500 would now
be the key support levels for the Markets as it also it is a important pattern
support and also falls in close vicinity of the 100-DMA which is 8493.
Today, the levels of 8625 and 8660 will act
as immediate resistance levels whereas the supports will come in at 8550 and
8500 levels.
The RSI—Relative Strength Index on the
Daily Chart is 40.7080 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 October
futures have 5.57 lakh shares or 2.81% in Open Interest as it continued to see
unwinding of long positions in the Markets.
Coming to pattern analysis, the NIFTY has
clearly shown a downward breach from the Descending Triangle formation on the
Daily Charts. On the Weekly Charts as well, short term weakness remains evident
and visible. Returning back to Daily Charts, it is likely that in event of some
more weakness, the NIFTY has major support at 8500 level. This is a major
pattern and also coincides with 100-DMA which is 8493. This zone should act as
major support for the Markets. In event of any technical pullback, the level of
8690 will remain a very stiff and sacrosanct resistance in immediate short
term.
All and all, it is also important to note
on fact that the while the Markets have declined, it has consistently seen
reduction of open interest. This is because of steady unwinding / off loading
of long positions. At the same time, a fact needs to be observed that there is
no visible creation of major shorts in the system. This requires us to sound
some more caution as in event of any further downsides, the NIFTY will see
difficulty finding support from the short positions. We reiterate to use all
technical up moves in protecting profits and maintain cautious outlook on the
Markets.
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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