Rohan Patil, Technical Analyst at Bonanza Portfolio
The Nifty50 on May 11 witnessed a marginally gap-up opening but couldn't hold on to its early morning gains and started to drift lower as the day progressed. Prices made an intraday low at 15,992.60 levels and then witnessed a sharp 150 points recovery in the second half of the trading session.
The benchmark index is trading within the falling channel pattern and prices on May 11 have taken support near the lower band and a sharp recovery on the daily chart has made a long trailing tail and on the daily candlestick.
The overall trend for the Nifty remains bearish as prices are trading well below its 21 and 50 days exponential moving averages on the daily chart. Momentum oscillator RSI (relative strength index - 14) has given a horizontal trend line breakdown and has drift below 40 levels with bearish crossover on the cards.
Nifty on the daily chart has formed a Bullish Bat Harmonic pattern at around 16,000 levels and prices are trading within its PRZ (potential reversal zone). Bullish Harmonic pattern can be a early signal of a trend reversal in the Benchmark index.
The immediate support for the Nifty is placed near 16,000-15,950 levels and the upper band of the index is capped at 16,500 levels if the index is closed above the said levels then the gate for the prices is open till 16,750 levels.
Here are two buy calls for next 2-3 weeks:
Infosys: Buy | LTP: Rs 1,527 | Stop-Loss: Rs 1,480 | Target: Rs 1,610 | Return: 5.50 percent
From the last four to five trading sessions' prices have shown a strong demand zone near Rs 1,525 levels and have protected its lower levels.
In terms of candlestick prices have formed a Bullish Reversal Engulfing pattern and prices are also finding support near its lower band of the Bollinger band, indicates a possibility of a bounce back of the current levels.
Nifty IT index on the daily chart has formed a Bullish ABCD Harmonic pattern and index is trading near its potential reversal zone (PRZ).
The momentum oscillator RSI (14) has shown positive divergence near oversold levels and indicator has closed above its average on the daily time frame.
Kotak Mahindra Bank: Buy | LTP: Rs 1,810 | Stop-Loss: Rs 1,755 | Target: Rs 1,910 | Return: 5.5 percent
After consolidating for more than four months, Kotak Mahindra Bank has given a breakout of a triangle pattern on the daily chart.
We are witnessing an outperformance from the Kotak Bank against the Bank Nifty in relative terms. As Kotak Bank is trading within the range of Rs 1,700 – 1,760 whereas Bank Nifty is trading lower and has given breakdown.
Prices are trading well above its important averages and momentum oscillator RSI has also witnessed a trend line breakout above 50 levels on the daily interval.
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