Nifty continues to trade in a narrow range rectangle pattern on the daily chart. The width of the rectangle pattern is off almost three hundred points where a lower band of the pattern holds support near 15,600 level and the upper band of the pattern is near 15,900.
For the last couple of trading sessions, the market breadth has been in favour of bulls where advances are more than the declines. DIIs and FIIs have been buying at lower levels.
All these data indicate a majority of stocks are moving out of their conjunction zone.
Momentum oscillator RSI (14) was reading above 70 level on June 15 and since then the oscillator has been reading in a lower high lower low formation on the daily timeframe.
Recently, RSI found support near 50 level and has formed a rounding bottom formation with closing above 55 level with positive crossover.
The current pattern formation in the RSI suggests uptrend may resume soon once the oscillator crosses above 65 level on the daily scale.
If Nifty breaks the upper band of the pattern which is placed near 15,920 then it may witness a major breakout which will help them cross the 16,100 level. Support for the Nifty is placed near 15,600.
Bank Nifty is trading in a higher high higher low formation within the rising channel pattern on a daily scale.
It is trading above its 21 and 50-day exponential moving averages and the gap between the two averages is widening on a daily basis which indicates a strong upward trend is likely to unfold in the banking sector.
Support for the Bank Nifty is placed near the 35,150 level and the upside is capped near 36,800.
Here are three buy calls for the next 2-3 weeks:
Lupin | LTP: Rs 1,172.50 | Target price: Rs 1,245 | Stop loss: Rs 1,130 | Upside: 6%
Lupin has witnessed a falling wedge pattern breakout on the daily timeframe and it is trading above its trendline resistance.
There has been above-average volume on the day of the breakout which confirms price-volume breakout on the daily timeframe.
Momentum oscillator RSI (14) is reading above 50 level with positive crossover on the daily scale, which indicates the uptrend may resume soon.
During this recent throwback, the stock took support near 50 percent price retracement which is placed near Rs 1,121 level on the daily timeframe.
Tata Steel | LTP: Rs 1,243.40 | Target price: Rs 1,320 | Stop loss: Rs 1,200 | Upside: 6%
This stock has been trading in a range of Rs 1,100 to Rs 1,200 for almost two months. It has formed rectangle pattern formation on the daily chart.
Tata Steel broke out of a rectangle pattern at Rs 1,244 on July 9. It has registered a decisive breakout that suggests a change in the trend from sideways to upside.
It is trading above its 21, 50 and 100-day exponential moving averages on the daily timeframe, which is positive for the prices in the near term.
The MACD indicator is reading above its centerline with a positive crossover above its signal line.
Momentum oscillator RSI (14) is reading near 60 level which indicates positive momentum may continue.
IndusInd Bank | LTP: Rs 1,050.40 | Target price: Rs 1,130 | Stop loss: Rs 1,010 | Upside: 8%
IndusInd Bank has been trading in a higher high higher low formation on the daily charts since April 20 which indicates bulls are under control.
If we observe the stock on a daily scale, one can find a typical price pattern where the stock consolidates after a pattern breakout.
This stock has broken out from the horizontal trendline on the daily chart. It has been finding support at its 21-day exponential moving average.
Indicators and oscillators have been showing strength in the current uptrend. Besides, rising volumes with price action suggest a long build-up in the stock.
(The author is a technical analyst at Bonanza Portfolio)Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are his own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.