By Rohan Patil
A bear tightens its grip for the second consecutive week closed almost three percent down in the current week and lost more than six percent in the last two weeks. From the last three trading days, prices have successfully sustained below their 100-day exponential moving average and also closed below it’s all the medium averages on the daily interval, which is a negative sign for the index.
In the coming week if the prices closed below 16800 levels then we will witness a failed bullish pole flag pattern on the weekly chart. And whenever there is a failure of a bullish or bearish pattern breakout on either side of the stock or an index we see a strong reaction on the opposite side of a breakout. Currently as per the Fibonacci retracement study prices have found support near the 61.80 percent retracement on the weekly chart which is placed near 17127 levels.
The momentum oscillator RSI (14) on the daily chart is closed at 37 levels and it is approaching near its oversold level but still, there are no signs of a bounce-back as we are witnessing a continuous selling from FIIs for the last two weeks.
From here on 16800 levels will act as immediate support for the Nifty50 and if prices are breached below this level then 16400 will be the next support zone for the index. The upper band is capped near 17400 – 17500 zones a strong bounce-back above this will open the gate for the 17800 mark.
BANK NIFTY
It was a very volatile week for the Bank Nifty where prices traded on both sides and formed a long-legged Doji candlestick pattern on the weekly time frame.
Prices recovered sharply on 26th & 27th Jan and manage to close above their 21 & 50 – day exponential moving averages on the daily interval. As per the Fibonacci retracement study prices are facing a strong resistance near 61.80 percent from their previous down move which is placed near 38845 levels.
As per the weekly chart, study prices have never closed below their 50-week exponential moving average since 30th Oct 20 and currently, the 50-week moving average is placed at 35300 levels.
Indicators in the short term are not able to show a clear picture of the future trend as they are hovering near 50 levels. On the daily chart, prices are facing a strong hurdle near 38850 levels once breakout above this level will confirm the bullish breakout in the prices. The supports are placed near 37000 and below those 36400 levels.
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The prices were trading in an inverted head & shoulder formation for the past two month and have formed a neckline resistance near 3500 levels.
BAJAJAUTO has broken above its neckline resistance of the pattern at 3500 levels on 27th Jan 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- 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.
MARUTI Suzuki India: BUYTarget: Rs 9150 | Stop Loss: Rs 8200Return 07%
The stock has been Nifty’s weekly top gainer and has more room left on the upside with a bullish setup in the offing. It had been trading in the range since 2019 between 6,400-8,400 and has now moved out of that range with a potential to move up 10-15%.
On weekly timeframe, the stock has given a inverse head and shoulder breakout but still it has to breach all time high levels in order to achieve the price objective. This pattern is said to be one of the reliable patterns to indicate a bullish reversal is set to happen. Price of the stock is above all major moving averages with technical indicators also pointing towards the same direction affirming the trend.
Momentum oscillator RSI(14) is showing a reading of 67 which is near to overbought zones which means that the stock can pullback to support areas on account of profit booking. MACD is showing strength with a positive crossover and hovering above centerline. ADX which shows the strength of the trend is also giving a uptick and showing a reading of 23.25 with +DMI also moving up confirming the strength of the trend.
(Rohan Patil is a Technical Analyst at Bonanza Portfolio. Views expressed are the author’s own. Please consult your financial advisor before investing.)