Considering the formation of mentioned candlestick patterns around the support levels, a pull-back move towards 10,350–10,400 cannot be ruled out.
A pull-back toward 10,350–10,400 cannot be ruled out this week. Very short-term traders can look for buying opportunities for few sessions.
Last week wasn’t that good for the bulls as we witnessed a sharp selling pressure in the first three sessions of the week.
On Tuesday, the Nifty breached its trading range of 10300 – 10640 levels on the downside and thus resulted into a breakdown from the ‘Bearish Flag’ pattern on the daily chart, which is a negative sign for the index.
But, the Nifty took support around the ‘200 DMA’ on Wednesday & Thursday and formed ‘Tweezer Bottom’ on the daily chart.
Also, we witnessed a formation of ‘Hammer’ pattern on Thursday. Due to some pull-back in last two sessions, the index concluded the week with a loss of 2.21 percent over its previous close.
Considering the formation of mentioned candlestick patterns around the support levels, a pull-back move towards 10,350–10,400 cannot be ruled out. Hence, very short-term traders can look for buying opportunities for few sessions.
Though a pull-back move is on the cards, the overall chart structure remains negative as we witness a formation of ‘Bearish Engulfing’ pattern on both weekly as well as monthly time frame charts.
The index is expected to correct again after retesting the breakdown level of the ‘Bearish Flag’ pattern on the weekly chart. Thus, one should look to exit from the long positions on bounces as we may again test the 10100 – 10000 levels in the coming few weeks.
Thus, traders are advised to hedge their long-only portfolio around 10400 level with long-dated Nifty put options.
Though the index may see selling pressure at higher levels, some stocks have corrected to their strong support levels and are giving good buying opportunity. Below is the list of the same.
Motherson Sumi: BUY| Target Rs 350| Stop Loss Rs 298| Return 10%
The stock has corrected sharply in the last few days and has reached to its strong support zone of Rs300-305. The stock made a ‘double bottom’ formation and has started rebounding from the mentioned support zone to form a couple of 'Hammer' candles on the daily time frame charts.
This was followed by a positive momentum in the last couple of trading sessions, which indicates a possibility of a reversal in the short term trend.
Also, the momentum oscillator ‘RSI’ is showing positive divergence on the daily chart and is showing strength in the counter. Looking at the current chart structure, we are expecting a bounce in the stock towards Rs350 levels in coming couple of weeks.
Any decline towards 310 should be used as a buying opportunity with a stop-loss of 298.
Bharti Airtel: BUY| Target Rs 445| Stop Loss Rs 379| Return 11%
The stock is moving in a corrective phase from the last ten weeks and has also corrected by more than 25 percent in the same time. Currently, we are witnessing a formation of a Bullish Harmonic pattern called ‘Bullish Bat’ on the daily charts.
The Potential Reversal Zone (PRZ) is placed in the zone of Rs387 – 393. The ‘RSI’ oscillator is showing a series of positive divergence on the daily chart, indicating a possibility of a short-term reversal.
Looking at the above technical evidence, traders are advised to buy the stock on declines for the target of Rs435 – 445 with a stop-loss below 379.
Jubilant FoodWorks: BUY| Target Rs 2350| Stop Loss Rs 1960| Return 14%
The stock has outperformed the broader market in the recent past as it didn’t correct too much in the ongoing correction seen in the market.
From the last two sessions, the stock is showing strength and is now coming out of a short-term consolidation phase. Also, the ‘RSI’ on the weekly chart is showing a positive reversal and thus indicating resumption in the uptrend in the coming weeks.
Considering current chart structure, we advised traders to buy the stock with the stop-loss of 1960, and on the upside, we may see targets ranging from 2300 – 2350 levels.
MORE WILL UPDATE SOON!!
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