The indecisive candle on monthly chart followed by bearish candle is suggesting that bulls are likely to struggle at higher levels.
Sharp cuts have been witnessed across sectoral indices as bears have tightened their grip further in the past week. The gap on the chart, which has been a concern for the traders in the past few weeks, has now been filled. The technical setup has changed in the last few days and bulls are likely to remain on the backfoot for some days but the pullback move is not ruled out.
In an upcoming week, Bank Nifty could provide an opportunity to the traders on the long side for the short term bounce. Banks are trading in the oversold territory after a steep fall of five days; the Bank index has approached its 200-day Exponential Moving Average which is placed at 28,798.
The price has formed “Inside Bar” pattern on daily chart followed by a green candle. RSI is trading in oversold zone and suggesting that pullback is likely and traders should place themselves on the long side for the short term move. Also as per Fibonacci retracement, the Bank Nifty has taken support at 38.2 percent retracement level of latest medium-term swing that could lead the move towards 50 EMA which is placed at 29,762 and even till 29,300.
However, the medium-term view is still favouring the bears and any pullback is likely to be short-lived. As the index is trading below all major short term and long term moving averages and the cluster of averages is placed in 30,300 - 30,410 range which will act as medium-term resistance and we could see the bears back in action around these levels.
The indecisive candle on monthly chart followed by a bearish candle is suggesting that bulls are likely to struggle at higher levels. To put the overall scenario into perspective the Bank Nifty is likely to offer short term bounce to the extremely short term traders but the downside could resume again at the higher levels.
Three stocks that are likely to offer short term gain
State Bank of India | Rating: Buy | CMP: Rs 342.6 | Target: Rs 363 | Stop Loss: Rs 331 | Return: 6 percent
The stock has retraced 50 percent from its latest swing move and formed “Doji” candlestick pattern on daily charts. RSI is bouncing back from important support levels. On the weekly chart, the counter has retraced till the support levels after an initial breakout and tested its 20 weeks moving average. Traders can expect the stock to regain upside momentum and go long for short term gain.
Bajaj Finance | Rating: Buy | CMP: Rs 3264.6 | Target: Rs 3499 | Stop Loss: Rs 2,990 | Return: 7 percent
The stock has gone through severe pain in the last few days and formed a bullish engulfing pattern on the daily chart after a decent fall. After breaking a support level the counter entered back in bullish territory and gave a sense of pattern failure for the bears. On the weekly chart, there is a formation of “dragon doji” that could lead the bounce back further and traders can opt for going long for short term gain.
Equitas Holdings | Rating: Buy | CMP: Rs 114.15 | Target: Rs 122 | Stop Loss: Rs 108 | Return: 7 percent
Stock is bouncing back and is looking lik ea bright candidate for the short term bounce back. There is positive divergence on RSI and prices taking support at the extended falling trend line. Short term traders can initiate long positions at CMP and on any fall till Rs 111.
Disclosure: The research analyst has not served as an officer, director or employee of the subject company, neither Rudra or its research analyst has been engaged in market making activity for the subject company. However, Rudra or its research analysts, or his/her relative or associate may have positions In Futures & Options.
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