For the last four trading sessions, Nifty was trading within a narrow band of approximately two hundred points.
But, a gap-up opening on December 16 witnessed a trading range breakout and prices successfully closed above that trading range.
There were more than half a dozen unfilled runaway gaps in the past one-and-a-half-month which indicate a strong up-trend in the market without much profit-booking.
If we draw an upward rising trendline on the weekly chart connecting the low of 7,511 to its next connecting point of 10,790, one can find the next trendline support near 12,500 which is almost a thousand points down from the current level.
Momentum oscillator RSI (14) continues to settle above its bullish range shift zone and is currently reading marginally above 70 levels with positive crossover on the daily scale. The 21-day exponential moving average is placed near the 13,200 level.
As we are trading in uncharted territory, instead of finding tops one should continue adopting buy on every dips strategy.
Going forward, the trend in Nifty may remain bullish. At the higher end, the rally may extend towards 13,925.
At the lower end, support is placed at 13,350, a breach of which will extend the fall till 13,200.
Here are three buy calls for the next two-three weeks:
United Breweries (UBL) | LTP: 1,153.95 | Target price: Rs 1,250 | Stop loss: Rs 1,100 | Upside: 8 percent
After a prolonged consolidation, UBL prices have come out of their shell and have witnessed a symmetrical triangle pattern breakout on the weekly interval.
The recent leg of strong up-move is also supported by strong volumes and it also resembles a strong consolidation breakout.
Momentum oscillator RSI (14) has witnessed a trendline breakout above 55 levels and is currently reading above 60 levels with positive crossover on the cards.
On the weekly chart, the MACD indicator has just risen above zero level with positive crossover.
Colgate Palmolive (India) | LTP: Rs 1,613 | Target price: Rs 1,730 | Stop loss: Rs 1,545 | Upside: 7 percent
This stock, on the daily chart, has given an ascending triangle pattern breakout and prices are currently trading above the trendline support.
Weekly price action suggests higher high higher bottom formation is likely to continue and the stock is likely to trade in unchartered territory.
Momentum oscillator RSI (14) is nicely settled above 60 levels with positive crossover on daily as well as weekly charts.
At the current juncture, the stock is giving a fresh breakout with above average volumes which is positive for the counter.
HPCL | LTP: Rs 230.30 | Target price: Rs 251 | Stop loss: Rs 218 | Upside: 9 percent
After a prolonged consolidation, HPCL has given a breakout of its Cup and Handle pattern.
After forming a strong base around Rs 220, the stock has given a stellar move over the past couple of weeks along with the broader market rally.
Oscillators and momentum indicators like RSI and MACD are showing strength in the stock on the weekly as well as daily charts.
The stock is trading above its 20, 50, and 100-day exponential moving averages on the daily interval which is a bullish sign for the prices.
The weekly price action of the stock suggests it is getting ready for an uninterrupted rally as it is moving ahead out of the consolidation range.
(The author is a technical analyst at Bonanza Portfolio)
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