MARKET TREND FOR MONDAY, JANUARY 23, 2017
The Markets on Friday saw its first corrective move after
couple of days of narrow consolidation as it ended the day with a net loss of
85.75 points or 1.02%. The move remained on expected lines as the NIFTY50
continues to consolidate in a defined range. For today, we expect a mildly
negative to stable start to the Markets. The levels of 200-DMA which stands at
8314 which also converges with one of the major pattern support as evident from
the Daily Charts will be the important level to watch for. So long as the NIFTY
trades above 8290-8320 zones, there will not be any structural breach on the
Charts. The intraday trajectory that the NIFTY forms will dominate the trend.
For today, the levels of 8390 and 8445 will remain immediate
resistance levels for the Markets. The supports come in at 8290 and 8265
levels.
The Relative Strength Index – RSI on the Daily Chart is
57.1507 and it does not diverge with the price and it remains neutral. The
Daily MACD continues to remain bullish while trading above its signal line. On
the Candles, a black candle occurred. It has occurred after resisting
multiple times to the 100-DMA and therefore establishes credibility of this
resistance level.
On the derivative front, the NIFTY January series have shed
22.09 lakh shares or 10.94% while the February series added over 9.82 lakh
shares or 34.12% resulting in net reduction in Open Interest.
The pattern analysis represents a clearer picture. The NIFTY
retraced from the 8440-8465 zones are resisting there for multiple times. The
100-DMA also remains present in that area resistance. The Friday’s decline has
established the temporary credibility of that area resistance. It can be safely
interpreted that the until the NIFTY moves past 8460-8480 zones, there will be
no significant up move. Until this happens we are all likely to see the NIFTY50
oscillating in a broad trading range with the levels of 8290-8320 zones acting
as very important pattern support area. It would be critically important for
the NIFTY to trade above this zone in order to avoid any more weakness from
creeping in.
Overall, we enter the expiry week of the current derivative
series, we will see volatility remaining ingrained in the Markets. Moreover, we
have a truncated week with the expiry happening one day earlier due to a public
holiday. We had also mentioned that though the structure on the Weekly Chart
remains intact, there are some divergent signals on the Daily Charts which may
force NIFTY50 to remain under ranged consolidation. However, there is no
structural dent on any Daily or Weekly Charts. Given this fact that
undercurrent remains intact, dips should be continued to be utilized to make
stock specific purchases so long as NIFTY trades above its 200-DMA.
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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