By Rohan Patil
Bears are getting aggressive on Dalal Street and have closed forcefully below its 21-week exponential moving average on the weekly time frame. Benchmark index has closed three per cent lower on the weekly basis and has engulfed its previous week’s green candle and formed a bearish engulfing candlestick pattern. On the daily interval, prices have comfortably settled below their 21 & 50 DEMA which is a negative sign for the index. Momentum oscillator RSI (14) has drifted below 40 levels with a bearish crossover on the daily chart.
We witnessed a refill rally from 16900 to 17600 levels but prices were not able to neglect its lower high lower low formation on the daily chart and found strong resistance at 17600 levels. Currently, Nifty is expected to trade in a range between 17400-16750 for the next few trading session until and unless prices are not giving any superior move on either side of the range.
Bank Nifty support in 34800-35000 range
The Nifty Bank has witnessed almost a 2,000 points swing in this week where it registered this week’s high of 37,581 and low of 35,535 while closing near to week’s low at 35,618. The index is trading below its 21 weekly EMA which is placed at 36,908 but still above its 50 and 200 weekly EMA. A pullback in the previous week did not sustain and this week’s selling has completely engulfed the previous week’s buying.
On the indicator front, weekly RSI has dipped below 50 indicating the momentum is on the downside whereas MACD also has started to show weakness as a negative crossover has happened but is still above the zero line. Weekly ADX which shows the strength of trend has given a downtick and is showing a reading of 25 which indicates consolidation to negative trend in the near term.
Important supports are now at 34800-35000 and resistance is placed near 36000-36200. The index is in a corrective mode and appears to be in the same lines for the next week too.
Infosys: BUYTarget: Rs 1920 | Stop Loss Rs 1770 | Return 05.40%
INFOSYS was trading in a broad range of 1700 – 1760 from last two months and has formed rectangle pattern on the daily time frame. On the 17th Dec prices have witnessed a breakout of a rectangle pattern at 1820 levels.
Stock is trading above its 21, 50 & 100- day exponential moving averages on a daily time frame, which is positive for the prices in the near term.
When we observe volume activity there has been above-average volume set up from the past couple of weeks on the daily chart, which indicates accumulation phrase. Momentum oscillator RSI (14) is reading above 60 levels with positive crossover on the daily scale.
Tech Mahindra: BUYTarget: Rs 1725 | Stop Loss: Rs 1590 | Return 05%
The prices were trading in an ascending triangle formation for the past one and half month and have formed a trend line resistance at 1625 levels.
Techm has broken out of a channel pattern at 1625 levels on 14th Dec and the prices have registered a decisive breakout that suggests a change in the trend from sideways to upside. Stock is trading above its 21, 50 & 100- day exponential moving averages on the daily time frame, which is positive for the prices in the near term.
The MACD indicator is reading above its centerline with a positive crossover above its signal line. Momentum oscillator RSI (14) is reading near 60 levels which indicates positive momentum will like to continue ahead.
(Rohan Patil is a Technical Analyst at Bonanza Portfolio. Views expressed are the author’s own. Please consult your financial advisor before investing.)