MARKET TREND FOR TUESDAY, FEBRUARY 21, 2017
In our previous note, we had projected high probability of
the benchmark NIFTY50 resuming its up move and heading higher; and keeping in
line with this and fuelled by a secular broad based buying, the NIFTY ended the
day at its 5-month high gaining 57.50 points or 0.65%. The not-so-classic Tweezers
that have formed may make the Markets work little harder than required but the
benchmark is heading towards its logical targets of 8950-8970 levels wherein it
is likely to take some breather. Today, we expect a modestly positive start but
at the same time, expect some volatility to creep in as me move ahead in the
session. The overbought nature of the Markets once will remain a cause of
caution but at the same time, we can expect liquidity to continue to chase the
Markets.
For today, the levels of 8905 and 8950 will act as immediate
resistance levels to the Markets. The supports come in at 8825 and 8750 levels.
The Relative Strength Index on the Daily Chart is 71.9552.
Though NIFTY has set a fresh 14-period high and RSI has not, this has resulted
once again into Bearish Divergence. The Daily MACD remains bearish while it
trades below its signal line. On the Candles, not-so-classic formation
that resembles to Tweezers has occurred. In the present context, it will
have relatively less significance. The only probability is that it can once
again pause the up move but at higher levels. This requires confirmation on the
following day.
The NIFTY February series have shed over 25.59 lakh shares
or 10.55% in Open Interest. The March series added over 23.06 lakh shares or
73.35% in Open Interest. There is a mild reduction in Open Interest which might
have resulted upon squaring up of shorts from lower levels. However, for any
sustainable up move this will need to be replaced by fresh longs.
The pattern analysis shows NIFTY advancing towards its
logical targets of 8950-8970 zones. These levels are one of the major area
resistance levels for the Markets and also represent Triple Top formation on
the Weekly Charts. They way advancement of NIFTY towards these levels is
distinctly possible, in the same breath, NIFTY taking some breather and
witnessing some profit taking at higher levels is equally probable.
Overall, with the expected positive start to the Markets, we
will continue to see positive trade at least in the initial session and will
see liquidity chasing the Markets. However, the overbought nature of the
Markets, the fatigue on the lead indicators and the NIFTY approaching its major
pattern resistance should not be overlooked. All future advances until 8950
levels should be utilized in protecting profits at higher levels. Positive
caution is advised for the day.
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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