"Nifty may continue to trade on the weaker side as long it trades below 10,470, which may give a pause in the current positive momentum. In such case, Nifty probable trading band is expected to be 10,470 to 10,370," says Jaydeb Dey, Technical Analyst at Stewart & Mackertich Wealth Management Ltd.
By Jaydeb Dey
Stewart & Mackertich Wealth Management Ltd.
The Nifty yesterday ended 0.05 percent up at 10,426.85. Early morning recovery from day’s low failed to sustain above 10,470, day’s high was 10,478.60, as discussed in our previous post. 30 daily EMA placed around 10,470 may continue to act as the immediate critical resistance in coming sessions too. Closing off day’s low led to an inverted hammer candle, which implies Nifty may again get into a trading band.
Further, Nifty has to breakout 30 daily EMA resistance placed around 10,480 to initiate next leg of up-move. Down side supports are placed around 10,370 and 10,330. Also, market is likely to manifest uneven volatility due to unpredictable domestic cues. Hence, cautious trading is advised.
On the Nifty hourly chart; upswing found resistance around 200 hourly EMA placed around 10,470. 100 hourly EMA placed around 10,390 restricted today’s fall. However, recovery in the last hour of trade led a closing above 100 hourly EMA is pointing towards probable trading band of 10,470 to 10,370.
Nifty patterns on multiple time frames show, the index may continue to trade on the weaker side as long it trades below 10,470, which may give a pause in the current positive momentum. In such case, Nifty probable trading band is expected to be 10,470 to 10,370.
Bank Nifty yesterday ended at 24,738.65 (up 0.3 percent). It reacted down from the critical resistance around 25,000 and closed off day’s high. However, critical 200 daily EMA support placed around 24,480 is still intact. Midway support is placed around 24,600.
Based on thorough technical study, the research firm has recommended Yes Bank which can give up to 5% return in the near short term:
Yes Bank | Rating: Sell | Target: Rs 300, stop loss: Rs 330 | Return: 6%
The stock rebounded from its previous multi-bottom area placed around Rs 300 and currently trading below the 200 daily EMA placed around Rs 320 levels. Chart pattern along with position of leading indicators suggests; midterm downtrend is intact as long as 200 daily EMA on the upside remains unharmed.
Trend following indicator MACD, running down below the zero line, coupled with –DI +DI bearish crossover on the daily chart suggests, this pullback is unable to take out the major resistance of 200 daily EMA placed around Rs 320 levels.
Based on the above mentioned observations, we recommend Yes Bank as a strong sell on rise for the near-term downside target of Rs 300.Disclaimer: The author is Technical Analyst, Stewart & Mackertich Wealth Management Ltd. 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.