On November 25, Nifty registered its lifetime high of 13,145.85 in the initial minutes of trade and later went through a forceful profit booking and closed below 12,900 levels.
Nifty fully engulfed its previous day's green candle and formed a bearish engulfing candlestick pattern at the lifetime high levels on the daily chart.
Since November 9, momentum oscillator RSI (14) had been reading above 70 levels which is an overbought zone.
But on November 25, it finally closed below 70 levels with a negative crossover. When such technical change occurs, we can expect some more extended profit-booking sessions.
One can call yesterday’s fall an overbought selling as we are not witnessing any weakness on the weekly chart.
Prices on the weekly chart are poised above all the major exponential moving averages.
Bank Nifty has formed a bearish ABCD harmonic pattern on the daily timeframe which is placed near 200 percent retracement from its previous intermediate low of 20,404 levels.
Bank Nifty can extend its profit-booking till 28,000 which is supported by a 21-day exponential moving average. Resistance is pegged near 30,000 levels.
As of now, strong support for Nifty comes at 12,750; if the index breaks this support then further downside would be there up to 12,550 which is supported by a 21-day exponential moving average on the daily scale.
Upside resistance comes at 13,150 levels.
Here are three buy calls for the next 2-3 weeks:
SBI has moved up after consolidation on the weekly timeframe, suggesting a rise in optimism among the investors.
The stock has witnessed a spectacular rally in the last three weeks leading to an almost 20 percent gain.
The weekly RSI (14) has made a double bottom at the oversold zone (below 30) and moved up higher, which indicates improved bullish sentiments.
Besides, the price has remained significantly above 50-day EMA on the weekly time frame.
Since the last week of May 2020, prices have been trading in higher top higher bottom formation on the weekly interval, and meanwhile, bullish formation is supported by a horizontal trendline breakout which is placed at Rs 230.
We believe that the positional trend of SBI has turned bullish, but looking at the steep rise, it is advisable to utilize short-term dips to accumulate longs.
On the Daily chart, Lupin has completed the ‘Bullish Bat Harmonic pattern’ and prices are currently trading above the potential reversal zone (PRZ).
Daily RSI (14) has shot up sharply from the oversold zone and is currently near 40 levels, looking to accelerate the momentum.
The stock is trading above its 50 and 100-day exponential moving averages on the weekly interval which is a bullish sign for the prices.
MACD has witnessed a positive crossover below the line of polarity on the daily chart which can be considered as an early signal for initial price reversal.
On November 24, the stock finally managed to surpass the multiple resistance zones around Rs 570 – 580 levels, which eventually confirmed a trendline breakout on the daily interval.
The recent leg of strong up-move is also supported by strong volumes and it also resembles a strong consolidation breakout.
The stock is trading above its 21 and 50-day exponential moving averages on the daily chart.
Momentum oscillator RSI (14) is reading above 60 levels with positive crossover, which is positive for the counter.
The MACD indicator is reading above the line of polarity with positive sentiments. Weekly price action suggests the stock is getting ready for an uninterrupted rally as it is moving out of the consolidation range.
(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.