MARKET TREND FOR THURSDAY, OCTOBER 27, 2016
The Markets had a thoroughly disappointing session yesterday
as it opened weak, got weaker and ended the day with net loss of 76.05 points.
Today, speaking purely on technical grounds, we expect the weakness to persist.
Further, today being the expiry day of the current derivative series, we will
continue to see the session remaining dominated with rollovers. The 100-DMA of
the NIFTY which is 8548 is likely to be tested and will now be the critical
level to watch out for while the 8690-8700 level has been firmly established as
the immediate term resistance for the Markets.
For today, the levels of 8650 and 8690 will act as
resistance levels while the supports are expected to come in at 8590 and 8550
levels.
The RSI—Relative Strength Index on the Daily Chart is
44.4632 and it remains neutral as it shows no bullish or bearish divergence or
any failure swings. The MACD has reported a bearish crossover and it now trades
below its signal line and is therefore bearish. On the Candles, a falling
window has occurred. This signifies a gap and it can have short term
bearish implications for NIFTY.
On the derivative front, the NIFTY October futures have shed
over 16.54 lakh shares or 11.79% in Open Interest. The November futures have
added over 34.77 lakh shares or 39.43% in OI resulting into net increase in OI.
While having a look at pattern analysis, the falling channel
is now firmly in place with the levels of 8698 acting as the immediate top for
the Markets. The falling trend line at 8700 and the 50-DMA of 8710 has now
established themselves as important and major pattern resistance for the NIFTY.
Having said this, it would not be a surprise if we see the NIFTY testing the
100-DMA levels and therefore the levels of 8548 will act as important support
at Close.
All and all, the level of 8548-50 remains critical levels to
watch out for and it would be critically important for the Markets to seek
support around these levels. Any breach below this will bring in more weakness.
Volatility is certainly to exist as today is a expiry day of the current
derivative series. We reiterate our cautious view on the Markets. Though
selective buying at lower levels is advised, more emphasis should be laid on
preservation of cash while maintaining a cautious view 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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