Benchmark Index Nifty formed an ascending triangle pattern breakout on the daily time frame on April 29.
After a short consolidation, it has given a breakout and looks geared for its next leg of the up move.
The 21-day exponential moving average acted like a sheet anchor for the index as Nifty didn't breach the moving average and continued to close above it.
Last week's bearish Dark Cloud Cover candlestick pattern was neglected by a sharp positive surge in the benchmark index.
We believe 9,400 will act as support and Nifty is likely to march towards 9,800 in the coming trading session. The beach of 9,400 will drag Nifty to 9,200 – 9,000 levels.
Bank Nifty has formed a smaller degree Rounding Bottom Pattern on the daily charts. The state-run banks are yet to particulate in the current rally of banking index.
The majority of state-run banks are trading at an extremely oversold zone and a sudden positive spike in these banks cannot be ruled out in the coming trading sessions.
Bank Nifty is likely to take the support of its 21-day exponential moving average which is placed around 20,400 level on the daily chart.
Bank Nifty, on the daily chart, seems to have completed its intermediate third wave at 16,116 and currently, we are on the fourth wave which is in a zigzag formation.
Due to recent up move, the key technical indicators and oscillators have turned slightly in the favour of bulls on the weekly interval, which is a positive sign for the index.
Here are three stock recommendations for the next 3-4 weeks:
Shares of Bank of Baroda have formed a bullish ABCD Harmonic pattern on the daily time frame and is currently trading near its potential reversal zone (PRZ) level.
The counter seems to have taken a lot of beating in an ongoing bear market. Momentum Oscillator RSI (14) is currently reading below 25 levels on weekly and daily intervals.
Bullish Harmonic pattern and oversold reading in oscillator indicate sharp oversold rally in the counter in the coming days.
Traders can accumulate the stock in the range of Rs 47.80 – 48.40.
After a short consolidation, the stock is again geared for its next leg of the up move. On April 29, the stocks witnessed a Bullish Pole Flag Pattern and are looking to accelerate on the higher side.
Momentum oscillator RSI (14) is reading above 60 levels on the weekly chart with positive crossover on the cards.
Currently, the stock is trading above its trend line support, sustaining above its 21 and 50-days EMA on a daily interval.
Traders can accumulate the stock in the range of Rs 504 - 511.
Shares of Asian Paints have formed a Bearish BAT Harmonic pattern on the daily time frame and is currently trading below its potential reversal zone (PRZ) level.
The counter was constantly outperforming benchmark index in recent days. Currently, the stock seems to have overextended its rally and profit-booking at the current level cannot be ruled out.
Momentum Oscillator RSI (14) has witnessed a negative crossover on April 29 due to a sharp price cut, which is an early indication of profit-booking in the counter.
Traders can short the stock in the range of Rs 1,760-1,775.
(The author is a technical analyst at Bonanza Portfolio)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.