MARKET OUTLOOK FOR WEDNESDAY, AUG 16, 2017
In our Daily Market note on Monday, we had mentioned about
the NIFTY taking some respite from the sharp corrective movement that it has
witnessed through the entire previous week. In line with those projections, the
benchmark NIFTY50 saw a gap up opening and witnessed a sharp technical pullback
and ended the day with gains of 83.35 points or 0.86%. However, the coming
sessions would be critically important for the Markets as the current pullback has
been on back of heavy short covering. It is important that such short covering
continues and subsequently gets replaced with fresh buying.
Wednesday will see the levels of 9825 and 9860 acting as
immediate resistance. The supports come in at 9750 and 9685 levels.
The Relative Strength Index – RSI on the Daily Chart is 43.5271
and it is neutral showing no divergences against the price. The Daily MACD is
bearish but has flattened its trajectory. On Candles, a small candle resembling
a bullish belt hold has occurred. Thus usually implies continuation of the
pullback.
The Pattern Analysis shows that the Markets has remained in
the rising channel that it has been trading in and has held the 50-DMA as it
support at the Close levels.
The VIX remains at 7-month high levels. It is also important
to note that the pullback on Monday has come with reduction in the Open
Interest which hints at heavy short covering. As mentioned above, it would be
critical to see that this continues and we see fresh longs being built over
coming days. As of now, the NIFTY has validated support at 50-DMA and the zones
of 9700-9770 will be extremely critical short term support. We recommend avoiding
shorts and making modest purchases with declines and continue to adopt cautious
approach for the day.
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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