Rohan Patil
For the last four months, the benchmark index has been trading in a rising channel formation.
Within that period, prices respected the lower band of the channel almost three times and eventually successfully rallied higher.
Liquidity driven rally has almost completed 78.60 percent retracement of the entire downswing seen from January 2020 top to March 2020 bottom.
On August 5, Nifty started the day with a half-a-percent rise and extended the rally for an hour. Later on, the market witnessed selling and traded with a bearish to sideways tilt and closed near yesterday's high.
Due to a strong positive opening and a closing near the previous day’s high, the market breadth remained in favour of bulls. For a couple of gainers, there was a loser.
For the last couple of weeks, India VIX seems to have flattened out and blocked in a range of 26 -23 levels.
One of the positive aspects since the last couple of months is that the Nifty is closely trading above its 21 and 50 – day exponential moving averages which is a major technical supporting factor.
Immediate support for Nifty is coming near 10,900 -10,950 zone and resistance is formed near 11,350 -11,400 zone.
If the next impulse up-move unfolds, the way it should, then we expect Nifty to rally towards 11,600 in the coming weeks.
Support for Nifty bank is coming near 20,800 – 20,700 zone and resistance is coming near 23,000 -23,200 zone; a break of this level will open the gate for 25,000 in the banking index.
Here are three trading ideas for the next 2-3 weeks:
Jubilant Foodworks | Buy | LTP: Rs 1,858 | Target price: Rs 2,020 | Stop loss: Rs 1,770 | Upside: 9%
On August 5, the stock finally managed to surpass the multiple resistance zones around Rs 1,800 – 1,820, which eventually confirmed a triangle pattern 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.
Prices are trading above the 21 and 50-day exponential moving averages on the daily chart.
Momentum oscillator RSI (14) is reading above 60 levels with positive crossover. The MACD indicator is reading above its line of polarity with positive sentiments.
Traders can accumulate the stock in the range of Rs 1,855-1866.
On the weekly chart, Sun pharma has given a breakout of the consolidation pattern, sustaining above all its major exponential moving averages.
A bullish candle formed on the weekly candle has closed above its previous several weeks high.
The majority of indicators an oscillators are showing a positive trend for the current scenario.
As almost every stock in this space is showing outperformance one after another, it’s time for this stock to move out of its box.
Traders can accumulate the stock in the range of Rs 526 - 531.
The stock has witnessed a triangle pattern breakdown on daily intervals and is now trading below its trendline resistance.
The short and medium-term trend of the stock is negative as it is trading below 21, 50 and 100- day exponential moving averages on the daily interval.
Momentum oscillator RSI (14), on the daily chart, is trading below 45 levels with negative crossover on the cards.
The counter is underperforming Nifty on a weekly chart which is visible on the Relative Strength (RS) indicator.
Traders can short the stock in the range of Rs 1,310 - 1,320.
(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.
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