MARKET TREND FOR MONDAY, FEBRUARY 20, 2017
The benchmark NIFTY50 on Friday saw a gap up opening but
settled with net gains of 43.70 points or 0.50% after coming off from the
opening highs. Today, we expect a directionless opening to the Markets in the
initial trade. The NIFTY has placed itself at a very critically important
juncture. On one hand, it has attempted an upward breakout after nearly seven
days of consolidation and on the other end; it has closed very near to the
critical resistance area of 8820-8830 levels. The opening levels, therefore,
will be greatly important and if the NIFTY manages to trade above these 8820 —
8830 zones, it will trade with an upward bias though the intraday trajectory
will remain crucial. If the NIFTY trades below 8820-8830 levels, it will push itself
again into short term consolidation. The behavior of the NIFTY vis-à-vis the
8820-8830 zone, therefore, will remain very crucial to watch for.
For today, the levels of 8830 and 8905 will act as immediate
resistance levels for the Markets. The supports will come in at 8765 and 8690
levels.
The Relative Strength Index – RSI on the Daily Chart is
68.8852 and it does not show any failure swings. The NIFTY has formed a fresh
14-period high while the RSI has not and this has resulted into Bearish
Divergence. The Daily MACD remains bearish while trading below its signal line.
On Candles, a rising window has occurred. Though this is a gap up bar
and indicates bullish continuation, but this formation if read in the current
context may push the Markets into some consolidation for very short time.
On the derivative front, the NIFTY February series has shed
over 3.66 lakh shares or 1.49%. This indicates that some profit taking has
taken place post gap up opening in the previous session.
Coming to pattern analysis, the NIFTY has poised itself at a
critical juncture. Post consolidation that lasted nearly seven sessions, the
NIFTY saw a gap up opening which could have otherwise led to a positive
breakout on the Daily Charts. However, the opening levels in the previous
session coincided with the major area resistance levels on the NIFTY’s Weekly
Chart and the Markets saw some profit taking at higher levels. With the NIFTY
ending very near to its congestion zone resistance of 8820—8830, if the NIFTY
trades below this level then some consolidation for some
short time cannot be ruled out.
All and all, even with the likelihood of the NIFTY
consolidating for some more time if it
trades below 8820-8830 zones, the undercurrent remains strong and the overall
trend remains intact. We still continue to advice to keep overall exposure
limited and light but selective purchases may be continued to be made. Any
major short selling should be avoided as there are no signs of the NIFTY
marking any immediate top. Overall, positive caution is advised for today.
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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