On October 28, Nifty engulfed its previous session's candle, erasing all gains of October 27.
Nifty, on a daily timeframe, is trading within a flag formation which is bounded in the range between 11,650 and 12,025.
The weekly chart also indicates a sideways trend as prices have been consolidating within 400 points for the last couple of weeks with no specific direction.
In the last three trading sessions, the index has been continuously finding support near its 21-day exponential moving average on the daily interval which is acting as a sheet anchor for the Indian bourses.
India VIX has jumped 5 percent and is in a rectangle pattern on the daily chart. It is on the verge of a breakout above 24 levels which will spike volatility in the coming trading sessions.
As of now, strong support comes at 11,650. If the index breaks this support then further downside would be there up to 11,500 that are supported by a 50-day exponential moving average on a daily scale.
Upside resistance comes at 12,025.
Here are two buy and one sell calls for the next 2-3 weeks:
Oracle Financial Services Software (OFSS) | Buy | LTP: Rs 3,185.25 | Target price: Rs 3,420 | Stop loss: Rs 3,040 |Upside: 7%
After a prolonged correction, OFSS has given a breakout of its falling channel pattern on a monthly timeframe.
After forming a strong base around Rs 2,800, the stock has given a stellar move over the past couple of months along with the broader market recovery.
The stock has been steadily moving higher since March lows and has already given decent returns.
The strong reversal in momentum oscillator RSI (14) from 30 levels has set up a V-shape reversal. It is currently reading near 50 levels with positive crossover on the monthly interval.
By observing Relative Strength (RS) on a weekly horizon, one can observe that the stock has been outperforming the benchmark index since April 20.
A recent dip in prices can be used as an accumulation opportunity as prices are retesting the trendline support on a weekly timeframe.
HDFC Life Insurance Company | Buy | LTP: Rs 586 | Target price: Rs 650 | Stop loss: Rs 558 | Upside: 11%
On October 27, the stock surpassed the multiple resistance zones around Rs 572 –581, which eventually confirmed a falling wedge 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) has witnessed a horizontal trendline breakout above 55 levels and is currently reading near 60 levels with positive crossover on the cards.
The MACD indicator is reading below the line of polarity but the short-term average has crossed above its signal line and has hinted at an early trend reversal on a daily interval.
Sun Pharmaceutical Industries | Sell | LTP: Rs 462.20 | Target price: Rs 440 | Stop loss: Rs 477 | Downside: 5%
The short-term trend of the stock is negative as it is trading below 21 and 50-day exponential moving averages on the daily interval.
Momentum oscillator RSI (14) on the daily chart has breached its horizontal trendline support and is reading below 40 levels with negative crossover on the cards.
On the weekly chart, prices have confirmed upwards rising trendline breakdown and are looking to fall lower on a broader timeframe.
The breakdown is confirmed with above average volumes on a daily interval.
(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.