MARKET OUTLOOK FOR FRIDAY, FEBRUARY 03, 2017
It seems we have once again entered a period of positive
consolidation as the benchmark NIFTY ended the day with a modest gain of 17.85
points or 0.20%. The Markets saw volatile movements on either side as a
recovery was seen from the low point of the day and the last hour of the trade
also saw rapid paring of gains. Today, we expect a quiet start but in the same breath,
consolidation coupled with volatile movements on either side will also be seen.
The NIFTY50 has fiercely consolidated at Close levels and it will continue to
do so in immediate short term while also continuing to put underlying strong
undercurrent on display.
For today, the levels of 8750 and 8785 will act as immediate
resistance for the Markets. The supports will come in at 8660 and 8610 levels.
The Relative Strength Index – RSI on the Daily Chart is
72.6067 and it does not show any failure swing. It continues to trade in
overbought territory. It also continues to portray Bearish Divergence on the
Charts as the NIFTY has made a fresh 14-period high while RSI has not. The
Daily MACD stays bullish while trading above its signal line. A Spinning Top
on the Candles an indecisive session and the overbought nature of the Markets
may temporarily halt the up move.
The NIFTY February series have further gone on to add over
7.98 lakh shares or 3.83% in Open Interest. This continues to show buoyant
intent of the Markets.
The pattern analysis evidently shows that despite the
buoyant undercurrent and strong structure, the lead indicators seem overstretched.
We may see continued up moves but that will not be without any profit taking
from higher levels. There are good amount of chances that the NIFTY once again
oscillates in a defined range with an upward bias. The NIFTY tracking upward
Bollinger Band while remaining overbought broadly suggest some imminent range
bound correction.
Overall, with the lead indicators remaining overstretched
and the NIFTY trading in overbought territory, we may not see any runaway rise
in the immediate short term. Some amount of healthy correction would be welcome
and even imminent. A minor corrective activity in form of a range bound
oscillation cannot be ruled out. At the same time, it is equally important to
note that the downsides will remain limited and the corrections will remain
extremely shallow as the overall trend remains intact.
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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