Nifty formed four continuation gaps in the previous seven trading sessions and looking at the weekly structure, it may continue its ongoing bull ride.
On November 11, Indian bourses opened positive following global trends and swung on both sides throughout the day.
Nifty trimmed its initial gains and drifted more than 100 points from the day’s high but cut its losses, closing near the high in the final hour of the trading session.
After eight straight sessions of bull run, Nifty has formed a bearish ABCD harmonic pattern on the daily timeframe which is placed near 161.80 percent retracement from its previous intermediate low of 11,535 levels.
Momentum oscillator RSI (14) on the daily chart has risen above 75 levels which is an overbought zone.
An overbought zone doesn’t mean an immediate sell or a trend reversal as a counter can remain above 70 levels for a while.
Bank Nifty on the daily chart has formed a bearish hanging man candlestick pattern in which its wick is almost double the body.
A bearish pattern after eight green trading sessions on both the indices suggests a profit-booking or sideways consolidation.
On the lower side, 12,500 should work as support and resistance will be seen at 12,850–12,900 levels.
Here are three buy calls for the next 2-3 weeks:
LIC Housing Finance | LTP: Rs 322.55 | Target price: Rs 348 | Stop loss: Rs 305 | Upside: 8%
A recent spurt in prices has scooped LIC Housing Finance above its downward sloping trendline resistance on the daily timeline.
The counter has also witnessed a classic symmetrical triangle pattern breakout on the daily timeline.
The symmetrical triangle pattern normally acts as a continuous pattern after a prolonged consolidation.
A spurt in prices has made the stock settle above its 50 and 100-day exponential moving averages on a daily timeframe, which is a positive sign for the stock.
Momentum oscillator RSI (14) has settled in the range of 50 to 70, which is a bullish range shift for the indicator on the daily chart.
Bajaj Holdings And Investment | LTP: Rs 2,665 | Target price: Rs 2,900 | Stop loss: Rs 2,500 | Upside: 9%
The stock is likely to complete its ABC zigzag correction and most probably the wave 4 has been conquered.
Prices have completed its wave 4 at 61.80 percent Fibonacci retracement from the bottom of wave 2 till the high of wave 3.
Momentum oscillator RSI (14) on the weekly chart has formed an intermediate bottom and topped 40 levels with positive crossover.
In terms of the candlestick, the stock has formed a bullish harami pattern on the weekly chart.
Bullish candlestick pattern near intermediate bottom adds more confirmation for its next leg of an up-move.
ITC | LTP: Rs 185.20 | Target price: Rs 202 | Stop loss: Rs 175 | Upside: 9%
After consolidating in a narrow range of Rs 162 – 175, the stock has witnessed a breakout above its rectangle pattern on the daily timeline.
The stock has given a bullish breakout with above-average volume, which indicates optimism towards the prices.
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.
On the daily and weekly charts, the stock has witnessed a shift of trend to the upward forming base with congestion.
(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.