MARKET TREND FOR FRIDAY AUGUST 26, 2016
The Markets witnesses a selloff in the second half of the
session and failed to capitalize on its positive opening while ended the day
with losses. Yesterday’s negative close keeps the Markets within the congestion
zone that it has been trading in past couple of sessions. Today, we once again
expect the Markets to open on a flat to mildly positive note and look for
directions. Overall, it is likely to remain range bound and is likely to trade
in the sideways congestion zone while the levels of 8500-8480 acting as
critical supports on the downside.
For today, the levels of 8650 and 8695 will continue to act
as immediate resistance levels for the Markets. The supports come in at 8550
and 8500 levels.
The RSI—Relative Strength Index on the Daily Chart is
50.6502 and it has reached its lowest value in last 14-days which is bearish.
The RSI has set a fresh 14-period low while NIFTY has not yet and this shows
Bearish Divergence. The Daily MACD stays bearish while trading below its signal
line. On the Candles, following two long lower shadows / hammer-like an engulfing bearish pattern. Such patterns
are more effective and preferable after a downtrend to mark a potential
reversal. But in case of NIFTY this has appeared in a congestion and during a
sideways movement. However, this still throws some potential possibility of up
move but in any case this needs confirmation.
On the derivative front, the NIFTY September series has
begin with net addition in Open Interest. The NIFTY PCR stands more favorably
at 0.88 as against 1.04.
Coming to pattern analysis, as mentioned in our yesterday’s
edition, Markets stood the chances of breaking free out of the congestion zone
and attempt to more towards its previous high had it capitalized on the positive
opening that it got. Instead, the Markets came off nearly 80-odd points from
the high point of the day and continued to remain within the congestion zone.
The Markets have been witnessing sideways consolidation over past couple of days.
In event of any downsides, the levels of 8500-8480 are likely to act as
sacrosanct supports. In event of up move, the levels of 8700-8728 will post
stiff resistance to the Markets before any sustainable up move occurs.
Keeping in view the sideways range bound movement; we
continue to remain in line with the analysis carried out over past couple of
days. The undercurrent continues to remain buoyant and the structures on the
overall charts continue to remain intact. While avoiding major shorts, all dips
should be continued to be utilized to make selective purchases. While profits
still needs to be protected at higher levels, cautious optimism is advised for
today.
Milan Vaishnav, CMT
Technical Analyst
Member: Market Technicians Association, (MTA), USA
Member: Association of Technical Market Analysts, (ATMA), INDIA
+91-98250-16331
