MARKET OUTLOOK FOR TUESDAY, JULY 11, 2017
Markets had a very eventful session for Monday and NSE made
headlines but all for the wrong reasons. Normal trading in the Cash segment
remained halted for the first three hours of the day due to a technical glitch.
Amid such chaos, the NIFTY went on to form fresh lifetime highs and ended the
day with decent gains of 105.25 points or 1.09%. At this juncture, we wish to
point out that the rise that we saw on Monday has been grossly due to short
covering. Without disputing the underlying trend which remains absolutely
intact, we recommend not getting carried away with Monday’s rise.
The levels of 9790 and 9830 will play out as potential
resistance levels for the Markets, supports will come in at 9710 and 9685 zones.
The Relative Strength Index – RSI on the Daily Chart is
69.2461 and it has reached its highest value in last 14-period which is
bullish. No divergence is seen against the price. The Daily MACD stays bullish
while trading above its signal line. A Candle with a long lower shadow
occurred. It has potential to halt the up move given the fact that it has
occurred near the high price levels.
Going by the pattern analysis, it is seen that the NIFTY has
attempted to move past the resistance of the rising trend line. This was acting
as resistance as the NIFTY has breached it on the down side.
Overall, there is no disputing the fact that the overall
structure continue to remain perfectly buoyant. However, NIFTY stands
overbought on the Stochastic and is on the verge of getting overbought on the
RSI. Further, the OI has decreased with the rise and this indicates that heavy
short covering has occurred. Even if the NIFTY attempts to continue it’s up
move, some loss of momentum is likely. Maintenance of vigil at higher levels is
reiterated.
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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