MARKET TREND FOR FRIDAY, MARCH 17, 2017
Strong uptrend continued in the Indian Equities as the
benchmark NIFTY50 opened higher and spent the entire session maintaining the
gains while ending the day with net gains of 68.90 points or 0.76%. Speaking purely
on the technical grounds, there are bright chances that we see a modestly
positive opening and NIFTY continues with its up move marking fresh highs. At
this juncture, it is very much evident that the global liquidity is fuelling
the Markets and under such conditions it is normal for the Markets to trade in
overbought territory for some time but on the Daily Charts the lead indicators
look bit overstretched. At the same
time, the NIFTY rests at important pattern resistance on the Weekly Charts.
Given this, there is no doubt that the up moves in the NIFTY will continue but
at the same time, we need to exercise much higher level of caution going ahead.
It would be imperative for the Markets to consolidate and then move higher
again. General buoyancy is very much likely to remain intact.
For today, the levels of 9195 and 9265 are likely resistance
levels for the Markets going ahead. The supports appear much lower at 9105 and
9020 levels.
The Relative Strength Index—RSI on the Daily Chart is
76.9629 and it has reached its highest value in last 14-periods which is
bullish. However, it continues to trade in overbought territory.
The NIFTY March futures shows further addition of over 7.63
lakh shares or 3.02% in Open Interest. This clearly presents the buoyant
picture and evidently displays underlying buoyancy in the Markets.
Coming to pattern analysis, the NIFTY has achieved a clear
breakout from its major pattern area resistance levels. This breakout has been
achieved with a breakaway gap. This occurring with high volumes shows the
strength of the breakout. Further strength in the Markets is displayed by the
fact that the NIFTY is not giving up gains and oscillates in a capped range
instead of any major corrective action.
Though we disregard the overbought structure of the Markets,
we need to understand that being “overbought” does not mean weakness. It is, in
fact a clear evidence and result of the strength. It simply means that the up
move may get halted at some time and the NIFTY then consolidates in a defined
range only to move higher. At this juncture, we categorically advice to refrain
from creating shorts even at higher levels as the upward momentum remains
absolutely intact. Barring some capped and range bound consolidation which
might happen at later stage, such activity should be used to make sectoral
purchases. Effective sector rotation will hold the key for future gains for the
market participants.
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
No comments:
Post a Comment
Note: Only a member of this blog may post a comment.