MARKET TREND FOR MONDAY, DECEMBER 19, 2016
The Friday’s session saw the NIFTY going nowhere as the
Markets opened modestly higher, came off in the morning trade itself and spent
rest of the entire session trading in sideways trajectory in a capped range and
ending with modest losses. Today as well, we keep our analysis on similar
lines. The NIFTY might see a flat to mildly negative opening and it is likely
to continue to resist to the rising trend line drawn from 7928 lows as it
currently trades below that. On the way up, this trend line and then the
200-DMA will continue to pose resistance on the Daily Charts.
For today, the levels of 8180 and 8220 will act as immediate
resistance levels which supports are likely to come in at 8105 and 8065 levels.
The RSI—Relative Strength Index on the Daily Chart is
44.5156 and they are neutral and show no failure swings or any type of bullish
or bearish divergence. The Daily MACD is bullish as it trades above its signal
line. On Candles, no significant formations are observed as of today.
On the derivative front, the NIFTY December futures have
shed over 7.09 lakh shares or 4.55% in Open Interest. Unwinding / offloading of
longs is evident from these figures. It would be critical to see if these are
replaced by fresh longs going ahead.
Coming to pattern analysis, the NIFTY has managed to form a
temporary base at 7928 levels which remain the current lows. The NIFTY has been
making attempts to pullback and confirm this bottom but it has not done so
successfully so far. Firstly, it has breached the rising trend line drawn from
7928 lows and now currently trades below that. Secondly, it continue to trade
below 200-DMA as well. For the NIFTY to resume its up move and successfully
mark a bottom, it will need to move past 200-DMA which is 8221 today and
comfortably sustain above that. So long as this does not happen, we will
continue to see the
Markets consolidating in a broad range and going nowhere.
Overall, the NIFTY is currently under consolidation but it
is important to note that there is no structural breach on the Daily Charts as
yet. Just that the NIFTY trades below its key resistance levels. In the given
circumstance major shorts should be avoided. On the other hand, the bond yields
in US are steadfastly maintaining their gains and showing no signs to retreat.
Also, the F&O data shows reduction in positions in the Markets. This may
hold back the NIFTY for some time. It would be critically important to see if
the fresh longs are added. The sum-total view of this is that NIFTY currently
remains in no-trade zone. Shorts should be strictly avoided and downsides will
see select purchases happening as sectoral churning is evidently seen in the
Markets.
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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