The pattern setup is yet another sign of diminishing strength & a breakdown below 10,200 from hereon would confirm the bearish reversal pattern & commencement of the counter trend.
Nifty has been hovering around the 'Engulfing Bearish' formation which occurred last week around the confluence zone of its 200-DEMA & 61.8 percent retracement of the January-March fall around 10,551. The negative divergence displayed by its corresponding daily RSI value in line with the resistance zone of the ongoing channel pattern remains a concerning fact for the sustenance of the ongoing up move.
The pattern setup is yet another sign of diminishing strength and a breakdown below 10,200 from here on would confirm the bearish reversal pattern and commencement of the counter trend. Hence, it looks ideal to utilise the ongoing rally to book profits in existing folio longs while trading positions should be adequately hedged.
While fresh shorts could be deployed once the reversal formation even on the daily scale would get reaffirmed on a breakdown below 10,200. Until then traders could retain long-short combo positions while the index rests within the range.
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Sell Bajaj Finance Futures
Dark Cloud Cover formation on the daily scale around its 200 DEMA resistance zone is followed by a fresh series of lower top lower bottom sequence on its intraday scale. The stock has again closed below its 5 DEMA while its 60 minute channel support lies around Rs 2,650 in confluence with its 20 DEMA level of Rs 2,630. Fresh shorts could still be considered upto Rs 2,860 with a stop above Rs 2,940 for a target upto Rs 2,630.
SBI Life had been hovering near its 200 DEMA level around Rs 796 from the last few sessions. Yesterday's close above the same has also supported with good volumes while its ADX has been signalling good sustained strength. Fresh longs could be added for an initial target upto Rs 835 with a stop loss below Rs 792.
Buy Nestle India
Stock witnessed a breakout from its recent contracting formation. Yesterday it also closed above its spinning top candle formation with good volumes. The convergence of its short term averages 5 & 20 DEMA along with its RSI moving above 51 is a good sign of developing momentum. Trading longs with a stop loss below Rs 16,550 could be considered for a pattern target upto Rs 18,100.
The author is DVP – Technical (Equity) at Tradebulls Securities.Disclaimer: The views and investment tips expressed by investment expert 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.