A failure to cross 11,700 levels can bring a supply for the market at the current junction.
Since the previous three instances, the upside for the Nifty index was capped at 11,700-odd levels. The index is now hovering in the range of 11,700-11,550 levels.
The Nifty on October 23 erased most of its morning gains and formed a small body candle with long wicks on both the ends which suggest the indecisive nature of traders.
Currently, the Nifty pack is halted near a horizontal trendline resistance on the daily time frame. Two consecutive days Doji pattern on daily charts of Bank Nifty suggests indecision among the bulls as well as the bears.
On the broader time frame (weekly), higher-high-higher-low formation is still intact, which holds our bullish stand well for the medium term.
Buying on every dip is advisable as most of the indicators and oscillators are in positive territory at the current setup. A decisive breakout above 11,700 levels will definitely open the gate for the Nifty to touch 12,000 mark in the coming weeks.
At the lower end of the range, 11,400 is the near-term support for the index which is well supported with 20-day exponential moving average (EMA). A failure to cross 11,700 levels can bring a supply for the market at the current junction.
Here is a list of top three stocks which could give 7-8 percent return in the next three to four weeks:
Blue Star: Buy| LTP: Rs 858.05| Target: Rs 930| Stop Loss: Rs 815| Upside 8%
Blue Star has been consistently maintaining above its long-term moving averages on the weekly interval and is currently trading in higher highs and higher bottom formation for the past one year.
On the weekly time frame charts, the stock has witnessed a breakout above a Horizontal Trendline which is placed at around Rs 832.50 levels.
A recent spurt in prices was supported with above average volumes on the daily chart, which adds more confirmation for a valid breakout. The majority of technical indicators and oscillators are suggesting positive revival to the current momentum.
Traders can accumulate the stock on dips in the range of Rs 852 - 865 for the target of Rs 930, and a stop loss below 815 on a daily closing basis.
ICICI Lombard: Buy| LTP: Rs 1,311| Target: Rs 1,403| Stop Loss: Rs 1250| Upside 7%
On October 22 ICICI Lombard witnessed a breakout of an Ascending Triangle Pattern on the daily time frame. The stock touched an all-time high on October 23 and has the potential to go higher.
Ascending triangle normally acts as a continuation pattern and is the ongoing trend after the breakout. Prices are sailing above its 50, 100 and 200 exponential moving averages which are positive for the stock.
As prices are trading at all-time highs and the momentum indicator RSI (14) is currently reading above 60 levels with positive crossover suggest that prices have enough room to move higher.
Traders can accumulate the stock on dips in the range of Rs 1,305 – 1,319 for the target of Rs 1,403 with a stop loss below Rs 1,250 on the daily closing basis.
GE Power India: Sell| LTP: Rs 710| Target: Rs 655| Stop Loss: Rs 735| Downside 7%
GE Power India on the weekly chart has given a breakdown of a Head & Shoulder Pattern at 711.50 levels. Currently, prices are trading below its neckline resistance which suggests bearish stance.
In the previous week, the prices drifted below its 200-days EMA which is acting as a strong resistance. The momentum indicator RSI (14) is currently reading below 45 levels with the lower high lower low formation on the negative crossover.
The MACD indicator is reading below its line of polarity with negative crossover. The stock may be sold in the range of Rs 701 - 710 for the target of Rs 655, and keep a stop loss above Rs 735.
The author is Technical Research Analyst, Bonanza PortfolioDisclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are his own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.Get access to India's fastest growing financial subscriptions service Moneycontrol Pro for as little as Rs 599 for first year. Use the code "GETPRO". Moneycontrol Pro offers you all the information you need for wealth creation including actionable investment ideas, independent research and insights & analysis For more information, check out the Moneycontrol website or mobile app.