MARKET OUTLOOK FOR TUESDAY, JUNE 06, 2017
While refusing to correct, the benchmark NIFTY50 continued
to scale fresh highs amid tentative movement which remained limited in a
defined range. The Markets on Monday ended with yet another modest gain of 21.60
points or 0.22%. On Tuesday, we expect a flat to modestly negative opening in
the Markets. Given the overstretched structure on the Daily Chart, we reiterate
that market participants need to approach the Markets with extreme caution now.
We further reiterate that henceforth, until some meaningful consolidation
occurs, traders should utilized the up moves only to book profits and any major
fresh exposure should be avoided.
While the levels of 9680 and 9730 are expected to act as
resistance for the Markets on Tuesday, supports will come much lower at 9630
and 9580 zones.
The Relative Strength Index – RSI on the Daily Chart is
72.2217. It not only trades overbought but also shows Bearish Divergence as
NIFTY did not mark fresh high even as RSI marked its fresh 14-period high. MACD
stays bullish trading above its signal line. No significant formations were
observed on Candles.
While having a look at pattern analysis, the Markets are
seen inching upwards after it managed to move past the rising trend line drawn
from 9200 levels. However, the movements so far on the upsides have remained
limited and tentative.
Further, it remains very important to note that the recent
gains have come while Markets traded in a very narrow range and on much
lower-than-average volumes. Lead indicators remain highly overstretched and the
NIFTY remains overbought as well. We recommend refraining from taking a fresh
major long positions and lay maximum emphasis on protecting profits at higher
levels.
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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