Thursday, November 3, 2016

Daily Market Trend Guide -- Thursday, November 03, 2016

MARKET TREND FOR THURSDAY, NOVEMBER 03, 2016
After a gap down opening yesterday, the NIFTY ended the day with a deep cut and showed no signs of recovery during the day while it moved in a 35-odd points range in sideways trajectory. Today, we can expect a subdued opening in the Markets but at the same time, we can expect some attempts by the Markets to find some stability as it rests at a important short term pattern support. However, it rules below the 100-DMA levels and therefore the level of 8567 will remain critically important to watch out for.

For today, the levels of 8567 and 8620 will act as important resistance while the supports come in at 8485 and 8450 levels.

The RSI—Relative Strength Index on the Daily Chart is 37.2195 and it does not show any failure swings. The NIFTY has formed a fresh 14-period low but RSI has not and this shows Bullish Divergence. The Daily MACD stays bearish as it trades below its signal line. A falling Window occurred on Candles. This is a gap and this can have bearish implications. However this needs confirmation.

On the derivative front, the NIFTY November futures have 1.54 lakh shares or 0.89% in Open Interest. This figure is not significantly higher and there has been no large scale offloading / unwinding that was visible in the Markets yesterday.

Coming to pattern analysis, the NIFTY continues to remain in a falling channel formation drawn from 8968 levels. Yesterday, it opened, remained and closed below 100-DMA level which is 8567 today. It is important to note that the NIFTY currently stays within the filter of this 100-DMA and also rests at important short term pattern support. This shows that there are some chances that the NIFTY attempts to find some base and stabilize at current levels. However, to do it, it is critically important for the NIFTY to pullback and trade above 100-DMA levels to avoid further weakness.

All and all, NIFTY is currently not at all out of woods as yet and so long as it rules below 100-DMA levels, it will continue to remain vulnerable sell-offs and volatile movements. In the current scenario, we maintain our view to approach Markets with elevated levels of caution. Shorts should be avoided and downsides should be utilized to make very selective purchases. We will see sectoral out performance from IT and select MidCap stocks. While remaining relatively light on overall exposures, cautious optimism 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

+91-98250-16331 / +91- 70164-32277



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