Nifty on June 9 opened marginally higher and registered its lifetime high of 15,800 after witnessing consolidation in the initial trading hours.
A sudden spell of selling emerged in the second half of the trading session and prices failed to sustain their higher high higher bottom formation on the intraday chart and the index closed below 15,650.
Nifty has given a decisive breakdown of a rising wedge pattern on the daily chart and prices have closed below their trendline resistance.
After the breakout of a falling channel pattern on May 21, from 15,100 to the all-time high of 15,800, Nifty has neither witnessed any throwback nor profit-booking for the last twelve trading sessions.
Momentum oscillator RSI (14) has witnessed a fall from 70 level which is an overbought zone and closed below this level with a bearish crossover.
The 21-day exponential moving average is placed above the upper band of the channel pattern and acting as a crucial support zone near 15,355.
Support for Nifty is placed near 15,400–15,350 levels while resistance is near 15,800.
Bank Nifty, on the daily chart, is trading within the rising wedge pattern and closed above its 21-day exponential moving average.
India VIX closed three percent lower at 14.75 and it has also broken its ten-month-long rectangle pattern on the daily chart.
The volatility index is trading lower which indicates that any short-term correction in the market can be utilised as a fresh buying opportunity.
Here are three buy calls for the next 2-3 weeks:
Escorts | LTP: Rs 1,200 | Target price: Rs 1,265 | Stop loss: Rs 1,162 | Upside: 5%
This stock was trading in a range of Rs 1,140 to Rs 1,195 for almost 33 trading sessions. Now it has formed an ascending triangle formation on the daily chart.
The stock has broken out of an ascending triangle pattern at Rs 1,220 on June 3 and has registered a decisive breakout that suggests a change in the trend from sideways to upside.
For the last couple of trading sessions, this counter has been revisiting its trendline support and has most probably completed its throwback.
It is trading above its 21 & 50- day exponential moving averages on the daily timeframe which is positive for the counter.
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 near 60 with positive crossover on the daily scale which indicates positive momentum for the counter.
Reliance Industries (RIL) | LTP: Rs 2,178 | Target price: Rs 2,300 | Stop loss: Rs 2,100 | Upside: 6%
RIL was trading in a range between Rs 1,850 and Rs 2,150 for the last six months. The stock has given a decisive breakout of a symmetrical triangle pattern and is currently hovering above the upper band of the triangle pattern on the weekly interval.
Reliance witnessed an above-average volume activity during the breakout which indicates price-volume breakout on the weekly scale.
The stock is trading above its 50 & 100- day exponential moving averages on the weekly timeframe which is positive for it for the near term.
Momentum oscillator RSI (14) is reading above 60 with positive crossover, looking to accelerate higher on the daily and weekly intervals.
Dr Lal PathLabs | Buy | LTP: Rs 2,998.80 | Target price: Rs 3,210 | Stop loss: Rs 2,874 | Upside: 7%
This stock had been trading in a range of Rs 2,750 to Rs 2,950 for almost two months. It has formed an inverted head & shoulder pattern on the daily chart.
It has broken out of an inverted head & shoulder pattern at Rs 3,000 on June 8 and has registered a decisive breakout that suggests a change in the trend from sideways to upside.
It is trading above its 21, 50 & 100- day exponential moving averages on the daily timeframe which is positive for it for the near term.
The MACD indicator is reading above its centerline with a positive crossover above its signal line.
Momentum oscillator RSI (14) has witnessed a horizontal trendline breakout which is placed at 60 which indicates positive momentum is likely to continue ahead.
(The author is a technical analyst at Bonanza Portfolio)
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