MARKET OUTLOOK FOR THURSDAY, OCT 26, 2017
After two days of range bound consolidation, the Markets today
attempted to breakout from a long rectangle formation which represents a broad
trading range. The benchmark NIFTY50 ended the day with a decent gain of 87.65
points or 0.86%. The highlight of the Wednesday’s trade remained banks in
general and public sector banks in particular as they witnessed a massive
upsurge gaining in the range of 25-49%. Going into trade on Thursday, in all
likelihood, we may see continuation of up move and the Markets continuing with its
breakout. However, one should not still throw caution to the wind as we still
await the confirmation of this strongly attempted breakout.
The levels of 10325 and 10390 will now act as immediate resistance
area for the Markets. Supports come in at 10200 and then at 10130 zones.
The Relative Strength Index – RSI on the Daily Chart is 67.5283. A
Bearish Divergence is observed as the NIFTY has formed a fresh 14-period high
but the RSI has not done so. Daily MACD stays bullish trading above its signal
line. On the Candles, a Rising Window has emerged. This is typically a gap with
the low higher than the previous high. This usually has bullish implications.
However, we cannot ignore the fact that this gap has also occurred like a “Hanging
Man-like” formation which also have a potential to halt the up move for a while
causing throwback.
Pattern analysis demonstrates the NIFTY attempting to breakout
from a rectangle formation which represents broad trading range for the
Markets. This usually needs confirmation on the next trading day in form or a
higher top and higher bottom.
All in all, we will continue to see stock specific action continuing
to dominate the trade on Thursday. Session is also likely to remain dominated
with rollovers as we enter into expiry of the current derivative series. We
would recommend approaching Markets with caution and restrict and keep overall
exposures highly stock specific though undercurrent undoubtedly remains buoyant
by all means.
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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