MARKET TREND FOR THURSDAY, FEBRUARY 09, 2017
Markets headed nowhere and the benchmark NIFTY50 ended flat
and virtually unchanged with nominal gains of 0.75 points or 0.01%. The Markets
traded in a capped range with very narrow movement on either side for the most
part of the day and in the second half
reacted with extremely volatility to the RBI Monetary Policy Review which kept
the rates unchanged and maintained the status quo. As anticipated by us, the
Monetary Policy remained a non-event and the NIFTY remained broadly in a
defined range. Today, we once again expect the Markets to see a tepid start and
witness a ranged movement with intermittent downward pressures. While
continuing to trade in overbought zone, NIFTY continues to remain vulnerable to
profit taking at higher levels.
The levels of 8820 and 8910 will act as immediate resistance
levels for the Markets. The supports come in much lower at 8710 and 8625.
The Relative Strength Index – RSI on the Daily Chart is
71.6313 and it does not show any bullish or bearish divergence or any failure
swing and is therefore neutral. The Daily MACD remains bullish as it trades
above its signal line but started to flatten its trajectory. On the Candles, a
long lower shadow occurred. Apart a small upper body that this Candle
contains, it also looks like a Hanging Man formation. Such formation
after a engulfing line that occurred in the previous session increases the
possibilities of the up move being halted manifold. However this needs
confirmation.
The NIFTY February futures have added over 1.99 lakh shares
or 0.93% in Open Interest. This figure, singularly, is not large enough to
indicate any major shift in sentiments of the market participants.
Coming to pattern analysis, over last couple of days, the
NIFTY has been chasing the fast widening Bollinger Band upper channel and while
doing so, it has continued to trade in overbought zone. As mentioned often, the
lead indicators are now currently overstretched and the overall structure of
the Charts look like a greedy chase which is very fast getting unhealthy. Given
the stable and buoyant structure on the Weekly Charts, the corrective dips on
the Daily Chart look overdue and this would be healthy for the Markets while it
prepares itself to move up again.
Overall, we do not see any runaway rise in the Markets soon.
The upper levels of 8820-8840 will continue to resist the up move. Though
sustainable up moves are not expected with the current structure of the Charts,
any up moves should be vigilantly used to protect current profits and
positions. In the given overbought scenario, individual stock specific
performance will hold the key to successful participation in the Markets. We
reiterate extremely cautious outlook on the Markets.
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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