MARKET TREND FOR WEDNESDAY, FEBRUARY 22, 2017
While trading precisely on analyzed lines, the Indian
Equities ended the day with gains as the benchmark NIFTY50 closed higher with
28.65 points or 0.32% after spending more than half of the session on a flat
note with minor losses and recovering in the final hour and half of the trade.
With this, the NIFTY has made its intent clear and we expect the momentum to
continue. We expect the NIFT to march towards our initially analyzed targets of
8950-8970 zones and at the same time we will have to remain ready to handle
increased volatility as the NIFTY approaches its major Double Top resistance
area. Today, a flat opening is expected and as we attempt to move towards
8950-mark, we expect large amount of volatility to creep in as well. . The
INDIA VIX not reporting fresh low even with NIFTY scaling higher is a clear
sign of heightened cautiousness.
For today, the levels of 8935 and 8960 will act as immediate
resistance levels. The Supports come in at 8865 and 8780 levels.
The Relative Strength Index – RSI stands at 73.3654 and it
continues to trade in “Overbought” territory. The NIFTY has continued to set a
fresh 14-period high while RSI has not and this has once again resulted into
Bearish Divergence. The Daily MACD continues to remain bearish while trading
below its signal line. No major formations are observed on Candles.
The rollovers were evident as the NIFTY February series shed
over 54.22 lakh shares or 24.99% in Open Interest. The March series added over
62.24 lakh shares or 114.19% in Open Interest. There is net addition in Open
Interest which shows likely continuation of upward momentum.
Going through pattern analysis, the NIFTY has approached its
Double Top resistance levels at Close near 8943. This level is expected to act
as major pattern resistance which NIFTY continues on its way up. So, 8945-8970
zones collective has more than one pattern resistance and are likely to induce
lot of volatility as we approach these levels.
As the Markets near its major pattern and area resistance
levels on both Daily and Weekly
Charts, given the present structure of the
Charts, need of the hour demands very heightened level of caution. The way we
advice not to short given the buoyant undercurrent, in the same breath, we
heavily suggest to protect profits with each up move now and remain braced for
heavy volatility in the Markets. Also as we have short week ahead with Friday being
a holiday, and as we enter the penultimate day of expiry of current series,
volatile environment is all likely to persist. State of high caution is advised
for the day along with remaining light on positions.
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
