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Last Updated : Jun 12, 2018 08:54 AM IST | Source:

Nifty may continue to face resistance around 10,850; Ashok Leyland a short term sell

“We still prefer buying on dips as long as critical supports are intact.” says Jaydeb Dey of Stewart & Mackertich Wealth Management

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Jaydeb Dey

The Nifty ended Monday 0.18 percent higher at 10,786.95. It opened on a flat note and moved towards the day’s high of 10,850. However, it failed to hold above 10,800 levels leading to a long upper shadow Shooting Star candle on the daily chart.

Candle patterns on daily chart suggests it may again retest its downside pivotal support placed at 10,700 levels. However, we still prefer buying on dips as long as critical supports are intact. On the flip side, 10,850 may continue to act as critical resistance.

On the Nifty hourly chart, sell-off in the last hour of the session led to formation of a bearish candle. Double top formation in the relative strength index along with higher price highs point towards negative divergence on the hourly chart and may result in further correction towards 10,750 and 10,700 levels.

Nifty patterns on multiple timeframes show it finished off the session with a long upper shadow Shooting Star candle which points towards nervousness among traders. The pattern suggests the index may continue to face resistance on a rise around 10,850 levels.

The Bank Nifty ended Monday 0.01 percent higher at 26,453.55. It ended the session with a Shooting Star candle. Its downside pivotal support is placed around 26,300 while upside resistances are placed around 26,600 and 26,700 levels.

Based on a thorough technical study, the firm recommends Ashok Leyland for the short term:

Ashok Leyland | Rating: Sell | Target: Rs 134, stop loss: Rs 149, Return: 6%

Recent pullback from Rs 132 levels failed to breakout 30 EMA on daily chart and reacted down below the 100 daily EMA placed around Rs 143 levels. Ending the session with a bearish candle while negative OI on daily chart continues rising makes the bear case even stronger.

Based on above mentioned observations, the firm recommends Ashok Leyland as a sell on rise for the short term downside target of Rs 134.

Disclaimer: The author is Technical Analyst at Stewart & Mackertich Wealth Management Ltd. The views and ideas expressed above may have been suggested to the clients of Stewart & Mackertich Wealth Management Ltd. It is advised that investors/traders should consult with their Certified Experts before taking any investment decision.
First Published on Jun 12, 2018 08:54 am
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