MARKET TREND FOR MONDAY, MARCH 06, 2017
The Markets on Friday remained subdued for the most part of
the session but the second half of the trade saw the benchmark NIFTY50 coming
off its lows and finally ended the day on a flat note losing 2.20 points or
0.02%. The discomfort at the lower levels was evident as the pullback was on
account of short covering from the low point of the day. Speaking purely on the
technical note, since the Markets ended the previous session coming off its
lows, we can expect the Monday’s session to start on a modestly positive note.
We no other headwinds, the NIFTY is most likely to continue with its up move in
the initial trade but broadly speaking the consolidation is likely to continue
but with a positive bias. The levels of 8950 will continue to remain a major
pattern area resistance at Close levels.
For today, the 8950 and 8990 will act as immediate
resistance levels. The supports will come in at 8835 and 8770 levels.
The Relative Strength Index – RSI on the Daily Chart is
64.3820 and it shows no failure swings. It also does not show any divergence
against the price. The Daily MACD is bearish as it still continues to trade
below its signal line but the trajectory is flattened. The Candles do not show
any major formation on the Daily Charts.
The NIFTY March futures have shed over 5.85 lakh shares or
2.65% in Open Interest. The fact that the NIFTY saw sharp recovery in the
second half of the session and this coming with decline in OI shows that the
pullback was because of short covering from lower levels.
The Pattern Analysis has confirmed the 8930-8950 zones as a
Double Top resistance area on the Daily Charts. For any meaningful up move to
occur, NIFTY will have to move past and close above this area. Until this
happens, we will continue to see broad based consolidation continuing in the
Markets. The Bollinger Bands are 37.71% narrower than normal but this does not
singularly suggest anything significant.
All and all, the NIFTY has continued to display buoyant
undercurrents. The fact that we saw short covering from the lower levels on
Friday displays discomfort of market participants at lower levels. However,
this needs to be replaced with fresh longs in coming days. Overall, while
completely avoiding shorts we recommend select stock picking at lower levels.
Overall, positively cautious outlook 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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