MARKET OUTLOOK FOR FRIDAY, MAY 26, 2017
In our Thursday’s note, we had mentioned about the existence
of short positions. The benchmark NIFTY50 saw a huge relief rally primarily
fuelled by short covering and supported by some fresh buying as well as the
NIFTY50 ended the day with strong gains of 149.20 points or 1.59%. The zone of
9380-9420 has once again re-established itself as a strong intermediate support
zone. Though we expect a quiet start tomorrow, we will now see Markets
consolidating once again near the rising trend line as a clean breakout is yet
to take place.
The levels of 9525 and 9580 will act as immediate resistance
levels while supports will come in at 9470 and 9430 zones.
The Relative Strength Index – RSI on the Daily Chart is
63.2407 and remains neutral showing no divergence against the price. The Daily
MACD still remain bearish while it trades below its signal line. A big white
candle occurred. The importance of the formation is that this big candle has
occurred near the support zone. This has re-established the credibility of the
support zones of 9380-9420.
The pattern analysis shows the Markets bouncing back from
the support zone of 9380-9420 and again resisting to the rising trend line
drawn from 9200 levels. The rising nature of the trend line is helping NIFTY
form fresh highs but it is still keeping it away from achieving clean breakout.
All and all, despite Thursday pullback, a clear breakout is
yet to be achieved. Until the NIFTY achieves such breakout, it remains prone to
consolidation once again. We reiterate avoiding shorts at any higher levels and
contrary to this, utilize the consolidation, if any, to make select purchases.
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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