MARKET TREND FOR MONDAY, NOVEMBER 21, 2016
The session Friday remained much narrow while the NIFTY ended the day with nominal losses after
spending the day in a capped range. Today, we once again keep the analysis on
similar lines with more tilt towards possibility of a technical pullback as
NIFTY continues to remain oversold and lead indicators not making fresh lows.
It is important to note that the NIFTY also continues to track the lower band
of the Bollinger Band while it has closed inside it as well even if it trades
below 200-DMA at close levels which is 8137 today.
For today the levels of 8137 and 8195 will act as immediate
resistance levels for today. The supports come in at 8048 and 7965 levels.
The RSI—Relative Strength Index on the Daily Chart is
26.5700 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 continues to
remain bearish as it trades below its signal line. On Candles, a Spinning Top occurred. Such sessions are typically session
with little price action as defined by difference between the Open and Close
prices. This indicates indecisiveness on part of market participants and often
warrants a potential change in existing trend.
On the derivative front, the NIFTY November futures have
shed over 13.36 lakh shares or 7.11% in Open Interest. The December futures
added over 3.69 lakh shares in OI. The NIFTY PCR stands well below 0.80 at
oversold levels.
Coming to pattern analysis, the NIFTY has competed the
measuring implications followed by the downward breakout from the falling
channel it has formed from 8968 levels. Though it currently trades below
200-DMA at close levels, it still remain within its 1% filter. Also, with the
NIFTY PCR below 0.80 and lead indicators remaining oversold, it is more likely
that we see an imminent technical pullback even when we remain in continuing
downtrend.
The NIFTY currently is tracking the lower band of Bollinger Band.
This, when read along with RSI, gives meaningful insight. With RSI being
“oversold” territory and NIFTY closing inside (above) the lower band of Bollinger
Band, it shows higher chances of a technical pullback.
All and all, there is slight contradiction in the Weekly
charts as mentioned in our Weekly note but on Daily Charts, a technical
pullback, even if a limited one remains overdue and imminent. The 200-DMA which
is 8137 will be immediate resistance but if the NIFTY manages to pullback above
this level, it may lay and prepare grounds for a potential bottom formation.
Though cash levels should be preserved, selective purchases may be made in
modest quantities. Cautious optimism is advised for 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
+91-98250-16331
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