The short term trend of Nifty has reversed and the recent swing high of 11,340 could be considered as an important top reversal pattern and this area is unlikely to be breached soon
After showing a sideways range movement in the last few sessions, Nifty witnessed a sharp downside breakout of the lower range of 11,075 on August 3 and closed the day lower by 182 points.
A long bearish candle was formed which moved below the crucial lower support of 10,900 in intraday session and closed the day on an edge of that area.
The long-term uptrend line (connected from the bottom of March 2020 low at 7,511 and rising lows) has been broken on the downside and Nifty closed below it in the last two sessions.
This is a negative indication and could confirm near-term top reversal pattern in Nifty. Hence, one may expect further weakness in the coming sessions.
The positive chart pattern like higher tops and bottoms continued on the daily timeframe chart of the recent swing high of 11,340 of July 29 and it could now be considered as a new higher top of the sequence.
As per this theory, Nifty has a downside room up to 10,600 to form any higher bottom formation of the sequence.
Nifty seems to have witnessed reversal from near the key overhead weekly resistance around 11,300 levels in the last week (resistance as per change in polarity).
A follow-through weakness so far this week, after a reversal of the last week and the significance of overhead resistance, could point towards more downward correction in the market, as per smaller and larger timeframe charts.
The short term trend of Nifty has reversed and the recent swing high of 11,340 could be considered as an important top reversal pattern and this area is unlikely to be breached soon.
One may expect further weakness in the market in the coming sessions. The next downside level to be watched is around 10,600, which could be achieved in the next week. Immediate resistance for any pullback rally is placed at 11,075 levels.
Here are three buy calls for the next 3-5 weeks:
After showing range movement in the last few sessions, the stock price witness a fine upside breakout on Monday and closed higher.
The stock is now placed at the edge of moving above another hurdle of the previous high at Rs 309.
A positive sequential movement like higher tops and bottoms is intact and Monday’s up-move was associated with rise in the volume which is positive indication.
Buying can be initiated in the stock at the current market price and add more on dips down to Rs 290.
The stock, on the weekly chart, had been moving up firmly as per the positive chart pattern like higher tops and bottoms over the last few months.Now the stock is placed at the edge of an upside breakout of the crucial overhead resistance of Rs 290-295.
Daily and weekly MACD signal further strengthening of upside momentum in the stock going ahead.
Buying can be initiated in the stock at the current market price and add more on dips down to Rs 270.
After showing a range movement in the last one month, the stock is now placed at the edge of upside breakout around Rs 91-92 levels.
The further sustainable upside from here could be considered as an upside breakout of the rectangle pattern.
Such upside breakout action could open up potential upside target of Rs 104 in the near-term. Volume and daily RSI are showing positive indication for the stock going ahead.
Buying can be initiated in the stock at the current market price and add more on dips down to Rs 88.
(The author is a technical research analyst at HDFC Securities)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.