MARKET OUTLOOK FOR WEDNESDAY, MAY 31, 2017
Positive consolidation continued in the Indian Markets as
the benchmark NIFTY scaled yet another fresh lifetime high while it once again
ended the day with nominal gains of 19.65 points or 0.20%. While acknowledging
the fact that the primary trend is strongly intact, the Markets seem little
overstretched and some minor corrective activity can be expected. We expect a
quiet start to the Markets on Wednesday and would expect some range bound
corrective activity to happen. Unless this happens, the Markets will remain
vulnerable to selling bouts from higher levels now on.
The levels of 9650 and 9680 will act as immediate resistance
zone. The supports come in lower at 9550
and 9530 levels.
The Relative Strength Index – RSI on the Daily Chart is
69.8782 and it is nearly overbought. Bearish divergence is evident as the NIFTY
scaled a fresh 14-period high while the RSI did not. The Daily MACD is bullish
while it trades above its signal line.
While having a look at pattern analysis, the NIFTY rests
above the rising trend line drawn from 9200 levels. It has attempted to achieve
a breakout from this trend line. However, given the overstretched lead
indicators, some minor corrective activity cannot be ruled out.
While we do not dispute the underlying strong buoyancy in
the Markets, it would be equally important for the Markets to see minor
corrective activities. Though it may not show any significant decline, some
range bound movements with bouts of profit taking from higher levels cannot be
ruled out. The persistent bearish divergence on the Daily Charts along with the
Markets being overbought on Stochastic is likely to put some brakes on momentum
and may subject the Markets to a brief corrective action.
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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