MARKET TREND FOR MONDAY, JANUARY 09, 2017
In our Friday’s edition, we had mentioned theoretical
chances of the NIFTY consolidating as it was yet to move past and Close above
the 200-DMA. NIFTY on Friday
consolidated as it did came off from its opening lines and ended the day with a
modest cut of 30 points or 0.36%. Tomorrow, we expect a quiet start to the
Markets. We may see a overall stable opening but we do not expect the NIFTY to
give a run-away rise. We may see some more ranged movement and consolidation.
Markets will set to react to some macro numbers like WPI Inflation, November
IIP, etc., and also to third quarter results like that of TCS, INFY, etc. in
days to come. Overall, speaking purely on technical note, the levels of
200-DMA, i.e. 8279 will remain important levels to watch out for.
For today, the levels of 8280 and 8335 will act as important
resistance levels. The supports will come in at 8210 and 8165 levels.
The RSI—Relative Strength Index on the Daily Chart is
56.9437 and it remains neutral showing no bullish or bearish divergence or any
failure swings. The Daily MACD stays firmly bullish as it trades above its
signal line. On Candles, no significant formation has been observed.
On the derivative front, the NIFTY January futures have shed
46,500 shares or nominal 0.25% in Open Interest. This figure is negligible
enough not to draw any conclusions regarding any possible change in sentiment.
While we have a look at pattern analysis, two things remain
clearly visible. First, the NIFTY has put the support firmly in place at
7900-7920 zones. Though it has not confirmed any reversal, it certainly has
established these levels as its immediate short term support. Second, the NIFTY
has formed a broad rectangle type trading range with the higher levels at 8275.
Currently, the NIFTY trades near the upper range of this broad trading range.
At these levels, it is encountering multiple pattern resistance. First this
upper end of the trading range itself is likely to act as resistance and
second; the levels of 200-DMA also converge in this area. Both of these factors are likely to create
short term resistance levels for the
Markets.
Overall, given the above factors, it is very much likely that
the NIFTY continues to show some consolidation in the immediate short term. Corrections, if any, are likely to remain in
the form of intermittent profit taking bouts. For the NIFTY to resume a
sustainable rally, it would be of paramount importance for the NIFTY to move
past and Close above the 200-DMA. Until this happens, we expect the NIFTY to
remain in a broad trading range. While avoiding major shorts, we continue to
advice making modest purchases in any corrective dips.
Milan Vaishnav, CMT
Technical Analyst
(Research Analyst, SEBI Reg. No. INH000003341)
Member:
Market Technicians Association, (MTA), USA
Canadian Society of Technical Analysts, (CSTA), CANADA
+91-98250-16331
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