Traders should retain long-short strategy alongside progressing choppy trend
Investors should utilize this corrective action to discover new avenues & opportunities for investing as the major trend remains intact.
September 30, 2020 / 08:16 AM IST
Nifty has commenced the current series at a vital pivotal support zone of 10,800-10,850. This zone is a confluence of major moving averages on various time scales viz 200-Day EMA, 20-Week EMA along with the convergence of the 5 & 20 EMA on its monthly scale. The up move could mark the strong footing for its next rally as the index is still resting within its ongoing Weekly Rising Channel.
So far the rebound from this support zone has been strong, but being a truncated week & options data cluster placed around 11,300 could act as a resistance for a while. A confident close above 11,330 in the coming session would be an immediate requisite for further rally which could be due to strong unwinding, until then expect the index to retain itself within the immediate consolidative zone of 11,330-11,150.
Traders should retain their long short strategy alongside the progressing trend which remains choppy in the short term, while investors should utilize this corrective action to discover new avenues & opportunities for investing as the major trend remains intact.
Here is a list of three stocks for investment in short term:
Buy Hindalco Industries
Positive sector outlook & occurrence of a Tri Star formation on its daily scale around Rs 155-160 cluster reconfirmed the strength in the support as the stock scaled towards Rs 180 in no time. A further breakout above the falling channel formation would propel it towards Rs 200. Positional longs could still be created with a stop below Rs 170 as momentum is expected to amplify once above Rs 180 towards Rs 200.
Buy Blue Star Company
Most of the white goods stocks are displaying signs of renewed strength. Blue Star has been one of the outperformers during the recent rally & its weekly consolidation too looks mature for an upmove. Overall the formation exhibits characteristics of a Bullish Pennant formation while its weekly price action holds confidently above its 200 WEMA level of Rs 624. With its weekly RSI been stable above 55 its ideal to start accumulating the stock for another leg of the rally. Longs could be added upto Rs 630 for an initial upside towards Rs 800 with a stoploss below Rs 600.
Occurrence of Bearish Engulfing formation on its weekly scale marked a firm resistance of its Rising Channel pattern. While today's breakdown below its 3-day low with its RSI slipping below 50 is a mark of fresh momentum. Pullback if any should be used to create fresh shorts around Rs 500 with a stop above Rs 510 for a potential move towards its 200 DEMA level placed around Rs 476.
(Sacchitanand Uttekar is the 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.