Wednesday, October 12, 2016

Daily Market Trend Guide -- Thursday, October 13, 2016

MARKET TREND FOR THURSDAY, OCTOBER 13, 2016
In our Weekly Note and in our Monday’s edition, we had expected the session to be one with shallow activities and that day the domestic equity markets ended the day with minor gains while hanging on precariously to the critical support level of 8690. Today, the Markets will open after two days of holidays and will have some catch-up to do with weak global markets. Speaking purely on technical terms once again, this may cause a modestly negative opening to NIFTY and once again, the level of 8690 will remain critical level to watch for.

For today, the levels of 8725 and 8760 will act as immediate resistance levels and the supports will come in at 8690 and 8620 levels.

The RSI—Relative Strength Index on the Daily Chart is 48.7340 and it remains neutral as it shows no bullish or bearish divergence or any failure swings. The Daily MACD continues to remain bearish as it trades below its signal line.

On the derivative front, the NIFTY October futures have shed over 1.76 lakh shares or 0.82% in Open Interest. This signifies modest continuation of offloading / unwinding of long positions.

Coming to pattern analysis, the NIFTY has continued to remain in a Descending Triangle formation and it is now moving towards its apex. The more a security price moves towards its apex during such formation, greater are the chances of any such formation failing. In the given case, the 50-DMA which is 8708 and the neckline levels of 8690 will be the critical levels to watch for and any breach below these levels will see more weakness in the Markets.

Overall, if NIFTY is able to trade above 8710, i.e. above the 50-DMA and the neckline levels, it will continue to remain in the current formation. However, any drip below 8690 will induce more weakness in the Markets. The domestic markets may witness some alignment to global markets and this may see some negative bias and choppiness remaining ingrained. While remaining very modest on the overall exposure, cautious approach is advised for the day.

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


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