MARKET OUTLOOK FOR FRIDAY, AUG 04, 2017
In our previous note, we had mentioned that technical
factors will continue to weigh heavy on the Markets. The overbought Markets
continued to see consolidation today and saw a modest decline of 67.85 points
or 0.67% on Thursday. Two things have come to light in a very dominant manner.
One, the zones of 10114-10140 remain very critical levels to watch out for, and
Second; we are seeing huge amount of short positions being added which is
likely to keep overall downsides limited.
The levels of 10090 and 10140 will act as immediate
resistance levels for the Markets. Supports come in at 9970 and 992
5 levels.
The Relative Strength Index – RSI on the Daily Chart is
63.5319 and it has just crossed from a topping formation which is bullish. The
RSI has marked a fresh 14-period low which is bearish. Further, with the RSI
setting a fresh 14-period low and NIFTY not doing so has resulted into Bearish
Divergence as well. The Daily MACD still remains bullish while trading above it
signal line but is moving sharply towards reporting a positive crossover.
The pattern analysis suggests that the Markets are likely to
continue to retrace some more from a sharp rising wedge formation on the Close
Charts. The immediate pattern support that it can look out for is the short
term 20-DMA.
Overall, the lead indicators very clearly suggest that some
temporary weakness is likely to continue to persist for some more time. At the
same time, the continued increase in the Open Interest also point towards
addition of shorts in the system. The best method to approach such Markets
would be strictly avoiding any significant short positions. It is best advised
to sit-through any corrective moves and utilize downsides in making select
purchases.
Member:
Market Technicians Association, (MTA), USA
Canadian Society of Technical Analysts, (CSTA), CANADA
Market Technicians Association, (MTA), USA
Canadian Society of Technical Analysts, (CSTA), CANADA
