After breaking out from a congestion zone on August 30, the markets have consolidated over the past three sessions and laying good ground for a further up move. On Tuesday, markets may open flat after a day of holiday. Today’s opening would be crucial to watch out for as we expect a modestly positive opening today. The markets are expected t o continue with the up move that it began in the second half of the Friday’s session and remain positive at least in the initial stage. The intraday trajectory that the markets form would be critical for the remaining part of the session.
The levels of 8,825 and 8,865 will continue to act as immediate resistance levels which we expect to get tested. The supports come in at 8,750 and 8,720 levels. The RSI—Relative Strength Index on the daily chart is 65.9872 and it has reached its highest value in last 14-days which is bullish. It does not show any bullish or bearish divergence. The Daily MACD continues with its positive crossover and it remains bullish as it trades above its signal line. While having a look at pattern analysis, the markets have attempted to achieve a breakout in the session of August 30 but it has been under sideways consolidation in last three sessions.
With the expected positive opening in the markets, it is likely that the attempt to move past the critical resistance levels of 8,825 and test further levels of 8,850 and 8,890 levels in coming sessions. In event of any possible intermittent downsides, the breakout levels of 8,720-8,740 will continue to send supports.
All and all, the expected positive opening and the sustenance of such opening would be crucial for the session today. There is slightly contradictory signals on the Daily and Weekly Charts. Though Weekly Charts clearly suggest a possibility of a fresh up move. The Daily Charts do not rule out the markets consolidating at higher levels for some more time. Therefore, in event of any intermittent downsides or corrective swings, all such opportunities should be utilised to make fresh purchases on selective note. Overall, the inherent strength remains very much visible on the charts.
(The author is Milan Vaishnav, CMT, consultant technical analyst at Gemstone Equity Research & Advisory Services)