MARKET OUTLOOK FOR FRIDAY, OCT 27, 2017
After initial hiccups in the morning trade, the Indian Equity Markets on Thursday
continued to chase momentum and went on to end at yet another lifetime high
while gaining 48.45 points or 0.47%. The final hour of the trade remained
volatile but that had more to do with rollovers. On Friday, as we head into the
session, there are two distinct possibilities that we see happening
simultaneously in all likelihood. There are bright chances that we see the
markets chasing the momentum. Along with this, we are also likely to see the
Markets meeting consolidation at higher levels as very evidently suggested by
lead indicators.
The levels of 10350 and 10395 will play out as immediate resistance
levels of the Markets. Supports come in much lower at 10265 and 10190 zones.
The Relative Strength Index – RSI on the Daily Chart is 69.8021
and it has marked a fresh 14-period high which is bullish. The Daily MACD stays
bullish while trading above its signal line.
There is a minor technical reason to worry. Following a Hanging
Man-like formation yesterday, today, an Engulfing Bearish Pattern has occurred.
The worry part is that it has occurred during an up move and it often markets an
immediate top for the Markets. Such formations do remain a potential threat to
the ongoing up move.
The pattern analysis suggest that the NIFTY has attempted to
breakout and has continued to do so. It is likely to continue with its attempt
to move higher but the formation on Candles, coupled with divergent signals of
lead indicators on Daily and Weekly Chart do not allow us to rest on our laurels.
The current structure of the Markets, though buoyant for the short
to medium term, does not allow us to get complacent. We continue to recommend completely
avoiding shorts due to the buoyant structure of the Markets; but at the same
time, continue to chase momentum while deploying high degree of caution. Select
stocks and sectors are likely to continue to out-perform the general markets.
Milan Vaishnav, CMT, MSTA
Technical Analyst
(Research Analyst, SEBI Reg. No. INH000003341)
Member:
CMT Association (Formerly known as Market
Technicians Association, (MTA), USA
Canadian Society of Technical Analysts, (CSTA),
CANADA
Society of Technical Analysts (STA),
UK
+91- 70164-32277
/ +91-98250-16331
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