MARKET TREND FOR TUESDAY, OCTOBER 18,
2016
While trading precisely on analyzed lines,
the domestic equity markets ended yesterday with losses while heading towards
the 8500-100DMA support zone. Today, we may see the Markets attempting to gain
some stability but just like yesterday, the levels of 8500 and the 100-DMA
which is also 8500 will be crucial level to watch for. It would be extremely
important for NIFTY to trade above this level in order to avoid any more
weakness from creeping in. Any breach below this will lead to some more
weakness in the Markets.
For today, the levels of 8545 and 8580 will
act as immediate resistance levels while supports come in at 8500 and 8420.
The RSI—Relative Strength Index on the
Daily Chart is 37.1088 and it has reached its lowest value in last 14-days
which is bearish. It does not show any bullish or bearish divergence.
The Daily
MACD stands bearish as it trades below its signal line.
On the derivative front, the NIFTY October
futures have shed yet another over 4.86 lakh shares or 2.53% in Open Interest.
This clearly indicates continuation of long unwinding / offloading in the
Markets.
Coming to pattern analysis, NIFTY breached
a Descending Triangle pattern on the Daily Charts as it went below the 50-DMA
which was also its neckline level of 8690. With yesterday’s decline, it has
completed its expected measuring implication. While it reached its expected
levels post negative breakout, the level of 8500 is important pattern support
as well. Post recent high of 8968, the NIFTY has formed a small falling channel
as well. The level of 8500 is a pattern support of the lower support line of
the Channel and is also the 100-DMA which is expected to act as support in the
near term at Close.
All and all, we are likely to see NIFTY
consolidating again and attempting to gain some stability. With the level of
8500 being all important support, any pullbacks will continue to meet with
intermittent selling pressures / bouts from higher levels. This will continue
to happen until we see clear sign of resumption of up move. This will also keep
volatility and choppiness ingrained in the Markets. Selective outperformance
will be seen and it is advised to adopt highly stock specific approach in such
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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