Current weekly candlestick pattern formation suggests up move intact unless it breaks 11,770 on the lower side
Nifty traded in a tight range of 12,000 on higher side and 11,800 on the lower side the entire last week, forming an inside bar type candlestick pattern.
Current weekly candlestick pattern formation suggests up move intact unless it breaks 11,770 on the lower side.
The recent price action of index is showing flag formation in progress having a lower side of the flag around 11,800 levels and upper side around 12,100 marks.
Since the formation is resembling a bullish flag, a decisive close above 12,100 will give a pattern breakout and target as per pattern comes around 12,500 and higher levels.
RSI indicator on the monthly time frame is trading around 63 whereas RSI on daily time frame is trading above 50 marks which signify positive momentum intact unless it slides below 50 marks.
At the same time, RSI on weekly time frame took a reversal from 50 marks forming pull back buy pattern, and currently trading around 63 levels indicating correction sell leg will complete shortly and the original trend may re-begin.
Nifty is trading above its major simple moving averages 50 DMA which are rising and placed around 11680 levels suggest strong uptrend to unfold in mid-term. Nifty’s short term moving average 5 Week EMA is rising and placed around 11,780 levels which imply weakness is only below crucial support of 11,780 till then one should opt for buy on dip strategy.
Major trend line support on the lower time frame and principle of polarity showing support near 11,780 -11,800 zones, if these levels hold then Nifty forms double the bottom pattern on an hourly chart and it can bounce back toward 11,970 and 12,050 levels.
Bank Nifty traded lower below its pivot point placed at 31000, last week forming a big body bearish candle. However, looking at oversold oscillators, a possibility of a bounce back towards 31,000 cannot be ruled out.
Here are the top stock trading ideas which can give good returns:
Tata Motors: Buy around Rs 163 | Target: Rs 198 | Stop loss: Rs 148 | Upside: 21%
After hitting high of Rs 435, Tata Motors has given correction and touched Rs 130 levels where its key support is seen. RSI is started curling up after testing its oversold zone and daily MACD gave bullish crossover in negative territory thus supports bullish bias in the stock.
Apart from this, positive divergence seen in RSI which suggest upside move in the counter in coming sessions We suggest to buy Tata Motors around Rs 163 with stop loss of Rs 148 for target of Rs 198.
REC: Buy around Rs 148 | Target: Rs 170 | Stop loss: Rs 134 | Upside: 15%
Recently, the stock gave ascending channel break out on upside which suggest trend reversal on daily chart. From last few days, it has been trading above its all significant DMA’s which indicates strength.
Formation of a big body bullish candlestick pattern while giving trend line breakout indicates stock can upsurge further higher. Buy REC around Rs 148 with stop loss of Rs 134 for target of Rs 170.
Indian Bank: Buy around Rs 265 | Target: Rs 295 | Stop loss: Rs 247 | Upside: 11 %
After hitting high of Rs 428, Indian Bank has given a correction and touched Rs 202 level where its key support is seen.
Emerging of green candle above 200 DMA’s on daily chart is showing upswing move towards upside. Sustainability of RSI above 50 and positive divergence adds the conviction of buying the scrip around Rs 265 for the target of Rs 295 with stop loss of Rs 247.
CESC: Buy around Rs 760 | Target: Rs 830 | Stop loss: Rs 719 | Upside: 9%
The scrip took a sharp rebound on upside after hitting the low of Rs 648. Currently it formed a strong base near its 50 DMA which comes near Rs 720 levels.
RSI & MACD is also looking firm which indicates support at current levels. One can go long in CESC around the level of Rs 760 for the target of Rs 830 with stop loss of Rs 719.
United Breweries: Buy around Rs 1,335 | Target: Rs 1,415 | Stop loss: Rs 1,290 | Upside: 6%
After taking a support of Rs 911, the scrip took a sharp rebound. From last few weeks it has made higher high formation in weekly chart, emerging of green candles above 200 DMA on daily chart showing upswing move towards upside.
Sustainability of RSI above 50 and positive divergence adds the conviction of buying the scrip around Rs 1,335 for the target of Rs 1,415 with stop loss of Rs 1,290.
(The author is Head of Technical & Derivative Research at Narnolia Financial Advisors Ltd.)Disclaimer: The views and investment tips expressed by investment experts on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.