MARKET TREND FOR WEDNESDAY, OCTOBER 19,
2016
Domestic equity markets had a decent day
yesterday as it saw a technical pullback. We had mentioned in our yesterday’s
edition that the NIFTY has achieved a measuring implication arising out of a
breach from descending triangle formation. Following this, a technical pullback
was expected however, the yesterday’s session remained better than expected.
Today, we can expect a mildly positive opening but the NIFTY is likely to
continue to find resistance at 8690 and then the 50-DMA which stands at 8704.
Today, the levels of 8510 and 8545 will act
as immediate resistance levels while supports will come in at 8620 and 8580
levels.
The RSI—Relative Strength Index on the
Daily Chart is 49.2011 and it remains neutral as it shows no bullish or bearish
divergence or any failure swings. The Daily MACD still continues to remain
bearish as it trades below its signal line.
On the derivative front, the NIFTY October
futures have 3.35 lakh shares or 1.79% in Open Interest. This clearly signifies
heavy short covering in the Markets.
Coming to pattern analysis, the NIFTY not
only achieved the lower target arising out of its negative breach from a
Descending Triangle Formation, but also tested its 100-DMA levels. While taking
support at these levels, a technical pullback was expected. This happened
yesterday, however, it becomes important to note that the NIFTY still continues
to trade below its 50-DMA which is 8704 and the level of 8690 which was the
support that it broke on the downside.
Both of these levels will continue to act as resistance for the NIFTY in
the near term.
Overall, even after yesterday’s rise, the
NIFTY is not completely out of the woods. It continues to remain in a falling
channel created from 8968 levels and also it trades below the 8690-8710
resistance zones. Further, it is also evident that the rise that we saw
yesterday was more on account of short covering it is important that this gets
replaced with fresh buying. Until this happens, we will continue to see the
NIFTY oscillating in a broad trading range and it will also remain vulnerable
to selling bouts from higher levels. We reiterate our cautious view and advise
to continue to use all up moves in protecting profits on existing positions.
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
No comments:
Post a Comment
Note: Only a member of this blog may post a comment.