Friday, November 4, 2016

Daily Market Trend Guide -- Friday, November 04, 2016

MARKET TREND FOR  FRIDAY, NOVEMBER 04, 2016
The Markets had a lackluster session as it gave up in the last hour of the trade to end the day with minor losses. Today as well, the NIFTY continues to hang in precarious balance. Yesterday, the NIFTY ended up taking support at the lower line (return line) of the falling channel that it has formed. Having said this, today, we can expect a lower opening and this is all likely to cause the NIFTY to open outside the falling channel raising possibilities of a downward break down. However, it would be important to see if the NIFTY improves as the day progresses and comes back inside the trading range of the falling channel.

For today, the levels of 8520 and 8555 will act as immediate resistance levels for the day. The supports come in at 8450 and 8420 levels on the downside.

The RSI—Relative Strength Index on the Daily Chart is 35.4053 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 remains bearish as it trades below its signal line.

On the derivative front, the NIFTY November futures have shed yet another over 1.72 lakh shares or 1% in Open Interest. The NIFTY PCR stands at 0.93 as against 0.95.

Coming to pattern analysis, the NIFTY has taken support as of now on the lower line (return line) of the falling channel that it has formed from 8968 levels. Any breach of this return line will cause the NIFTY to get weaker in the near term. Today’s likely lower opening will see the Markets opening outside this falling channel and this obviously is a reason to worry for the Markets. It would be critically important to see if there is some improvement as the day progresses in the second half of the session and the NIFTY crawls back into the trading range.

All and all, we sound high levels of caution in the Markets today. It is advised to refrain from taking any fresh positions at any side and maintain liquidity to hold and protect existing positions. At any levels, wherever possible, exposures should be curtailed. The reaction to the European Markets too will be important to watch in the second half. The NIFTY will also react to the GST rates that got finalized yesterday. Overall, very cautious outlook is advised on the Markets today.

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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