MARKET TREND FOR MONDAY, NOVEMBER 07, 2016
The NIFTY remained in a falling trajectory for the entire
session on Friday while the high resisted to the return line of the falling
channel that the NIFTY has formed from 8968 levels. While the NIFTY ended yet
another day in red, it also showed a clear downward breach from the mentioned
falling channel. Today, we can expect a quiet opening in the Markets. We expect
that there will be some stability in the initial trade and the Markets may
attempt to halt its downsides initially. Some technical pullback cannot be
ruled out but overall the NIFTY continues to remain vulnerable to intermittent
selling bouts.
For today, the levels of 8465 and 8510 will act as immediate
resistance levels for the day while supports will come in at 8405 and 8345
levels.
The RSI—Relative Strength Index on the Daily Chart is
32.4070 and it does not show any bullish or bearish divergence. However, RSI
has reached its lowest value in last 14-days which is Bearish. The Daily MACD
remains bearish as it continues to trade below its signal line. A Big Black
Candle has occurred and since it has occurred near the support area, it has
lent some credibility to the downward breach.
On the derivative front, the NIFTY NOVEMBER futures have added
over 2.04 lakh shares or 1.20% in Open Interest. The addition in open interest
shows some fresh short positions that is being seen in the system.
Coming to pattern analysis, the NIFTY has shown a downward breach
from the falling channel that it has formed from 8698 levels. In the Friday’s
session, the NIFTY has resisted to the return line after opening below it. It
ended much below it confirming a downward breach. Though this may indicate
continuing weakness in the immediate short term, the NIFTY is very near to
being oversold and this may lend some short term support to the Markets at
lower levels. NIFTY will have to move back above 8500 levels in order to avoid
any more weakness and remain in a trading range.
All and all, though the overall technical structure remains
evidently bearish, some technical pullback at current levels cannot be ruled
out. Even if we see some more downside, the nearly-oversold nature of the
Markets will certainly lend some support at lower levels. This may result into
a technical pullback even if we continue to remain in overall downtrend.
Volatility may remain ingrained in the Markets as we prepare ourselves to react
to US Elections. We continue to reiterate our advice to remain very light on
overall exposure. Maintaining liquidity and cautious view on the Markets is
advised for the day.
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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