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Technical View: Multiple bearish candles halt rally, Buy Pidilite, BHEL

Nifty 50 index has been in tight trading band since past few trading sessions due the emergence for multiple doji candlestick pattern.

Published: September 20, 2016 5:09 PM
Sensex, Nifty, BSE, NSE Nifty 50 index has been in tight trading band since past few trading sessions due the emergence for multiple doji candlestick pattern. (Photo: Reuters)

Nifty 50 index has been in tight trading band since past few trading sessions due the emergence for multiple doji candlestick pattern. The Nifty has an immediate resistance area at level 8,850 on the upside which will be a crucial hurdle to be crossed immediately. Recently, the emergence of multiple bearish candles near this zone on the daily charts halted the advance and these entire patterns indicate exhaustion, which is also confirmed by the negative divergence in momentum indicators, which indicates continuation range bound action or a short term pause in the current uptrend.

Overall, the market is in a bull structure trend and dips, if any, are an opportunity to initiate long positions at lower levels. The current formation would add bullish momentum only if the Nifty manages to close above 8,850 level. The support resides at 8750 on the downside which would act as a make or break level for the markets. The current formation indicates traders to maintain a positive bias and can anticipate a bullish breakout from this range and can expect targets of 9050 levels.

Pidilite has been in a strong uptrend and has an immediate support at the 700 levels on the downside. The overall structure remains bullish which indicates a possible resumption of the uptrend. The RSI has formed a positive divergence which hints for a rally in the near term and maintain an upside targets of 780-820 in the medium term.

Bhel after a sharp rise has consolidated above the long term 100 & 200 sma which also provided support to the current pattern which is a bullish signal. The stock is in a strong uptrend and any dips should used as a buying opportunity. The RSI is in bullish mode and is currently trading above the 50 levels. The prices have consolidated near its long term averages and the rising trend line and can expect price targets of 165-175 in near term

(The author is Manav Chopra, CMT, Head Technical Analyst at Monarch Networth Capital)

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