MARKET TREND FOR TUESDAY, DECEMBER 06, 2016
The Markets traded precisely as analyzed in our yesterday’s
edition as it consolidated and also maintained a positive bias while ending
with modest gains. The NIFTY consolidated and traded with minor losses in the
first half while the second half saw the NIFTY closing near the high point of
the day. Today, we expect the Markets to open on a flat to mildly positive note
and in all likelihood it is expected to continue its recovery, at least in the
initial trade. However, it is important to note that it still trades below the
200-DMA and it is crucially important for the Markets to move past this level.
For today, the levels of 8175 and 8250 will act as immediate
resistance levels for the Markets. The supports will come in at 8065 and 8010
levels.
The RSI—Relative Strength Index on the Daily Chart is
42.3528 and it remains neutral as it shows no bullish or bearish divergence or
any failure swings. The Daily MACD stays bullish as it continues to trade above
the signal line.
On the derivative front, the NIFTY December futures have
shed over 2.12 lakh shares or 1.35% in Open Interest. This remains mainly due
to the short covering that the NIFTY saw from the low point of the day. It will
be important to see if this gets replaced in the coming sessions by fresh
longs.
While having a look at pattern analysis, the NIFTY has not
yet violated the lows of 7926 levels. While pulling back, it has attempted to
form a higher bottom as well. However, presently it trades below its 200-DMA
which is 8173. It would be crucially important for the NIFTY to move past and
close above this level in order to continue with its pullback effectively. So
long as NIFTY rules below 200-DMA, it will continue to remain vulnerable to
selling pressures from higher levels.
All and all, the level of 200-DMA will be critical to watch
out for as it would be of paramount importance for NIFTY to move past this
level and Close above this. Until this happens, we cannot rule out the NIFTY
consolidating and being subject to some intermittent selling pressures at
higher levels. However, with the Markets not breaching its immediate lows, and while
it is attempting to form a higher bottom while pulling back, we continue to
reiterate to refrain from creating major shorts positions. Instead, it is
advised to continue to use all dips to make select purchases. Continuation of
positively cautious outlook 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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