Rohan Patil, Technical Analyst at Bonanza Portfolio
After forming a bullish engulfing reversal candlestick pattern in the previous week, the index continued to trade higher and closed above its previous week's high.
On March 15, prices formed a Bearish Dark Cloud Cover pattern and immediately on the next day, Nifty closed above the high of the bearish pattern and confirmed the failure of the bearish setup.
The benchmark index on the March 16 witnessed a 1 percent gap-up opening and sustained above its 21-day moving average (DMA) throughout the day and finally gave a horizontal trendline breakout on an intraday basis and closed 2 percent higher which is above 16,950 levels.
India VIX on March 16 had drifted below 25 levels with a drop of more than 9 percent and showing the signs of cooling off in volatility. Benchmark index after forming a Bullish Butterfly Harmonic pattern on March 8 at 15,671.45 levels has given a more than 8 percent return in just seven trading sessions.
Amid scenes surrounding the Ukraine-Russia war, investors are still not convinced with the easing of tensions as peace talks are not producing the desired results. With growing sanctions on Russia and FOMC meeting in the US, participants will be looking keenly at how the Fed reacts to rising inflation.
The upper band of the Nifty is currently placed at 17,200 levels and the immediate bottom for the Nifty is made near 16,400 levels. We are expecting the prices to trade within this broad range amid volatility on the cards.
Here are three buy calls for next 2-3 weeks:
Laurus Labs: Buy | LTP: Rs 579 | Stop-Loss: 555 | Target: Rs 620 | Return: 7 percent
The prices were trading in a rectangle pattern for almost four months and have formed a trend line resistance at Rs 567 levels.
Laurus Labs has broken out of a rectangle pattern at Rs 578 levels on March 11 and the prices have registered a decisive breakout that suggests a change in the trend from sideways to upside. Stock is trading above its 21, 50 & 100-day exponential moving averages on the daily time frame, which is positive for the prices in the near term.
The moving average convergence divergence (MACD) indicator is reading above its centerline with a positive crossover above its signal line. Momentum oscillator relative strength index (RSI -14) is reading near 60 levels which indicates positive momentum will like to continue ahead.
Colgate Palmolive: Buy | LTP: Rs 1,531 | Stop-Loss: Rs 1,460 | Target: Rs 1,650 | Return: 8 percent
The prices were consolidating near its 200-week exponential moving average and have founded a strong support near the same. The prices have formed a horizontal trend line resistance near 1480 levels which is just below its 50-week DMA.
Previous week prices closed four percent higher and have given a breakout of horizontal trend line resistance which is placed near Rs 1,480 levels.
On the daily time frame prices are trading above all its important averages and the indicator formation suggests bottoming out procedure is most likely completed in the counter.
Grasim Industries: Buy | LTP: Rs 1,604 | Stop-Loss: Rs 1,540 | Target: Rs 1,700 | Return: 6 percent
The prices have given a downward sloping trend line breakout on March 16 and have successfully closed above the same which confirms the breakout in the counter.
On the weekly chart prices have formed a Bullish Engulfing candle stick pattern near its 21-week exponential moving average and has confirmed the pattern by closing above the previous week’s close.
Momentum oscillator RSI (14) has witnessed a downward sloping trend line breakout near 45 levels and currently sustained above 50 level with bullish crossover on the cards.
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