By Rohan Patil
Nifty 50 continued its bearish trend last week and the sell-on-rise strategy was valid for the entire week. Prices drift for a second consecutive week with a fall of more than three and a half per cent. Nifty has fallen almost 15 per cent in the last six weeks from 18110 to 15780 levels. The Benchmark index has formed a double bottom pattern on the daily chart and the momentum oscillator RSI (14) has also drifted near its oversold (below 30) with a bearish crossover. Prices continued to trade below their (21, 50 & 100) and days exponential moving averages on the daily time frame.
Prices have made a Bullish bat harmonic pattern near 16100 levels but eventually failed with a strong selloff. Normally in technical analysis whenever a bullish pattern fails we see a strong bearish trend continuation for that limited period.
The sharp and instant bounce back at current levels cannot be ruled out due to the oversold condition in the majority of the indicators. The immediate support for the Nifty is placed near 15650 – 15500 levels and the upper band of the index is capped at 16200 levels if the index is closed above the said levels then the gate for the prices is open till 16400 levels.
Bank Nifty support at 33100
Bank Nifty is trading in a lower high lower low formation and the two continuation gap created on the daily time frame is still unfilled indicating a strong bearish trend.
The Bank Nifty is trading below all its important averages (21, 50, 100) on the daily time frame and the gap between the closest moving average and price is getting widened up which indicates a probability of a short term spurt in the prices.
The oscillator on the daily chart has drifted below the oversold levels while on the weekly chart oscillator has closed at 38 levels which are close to the oversold terrain. If we draw an upward rising trend line on the weekly chart then the closest support for the Bank Nifty is placed at 33100 levels and the upper band of the index is most likely to capped near 35000 levels
Gujarat Gas: BUY
Target: Rs 607 | Stop Loss: Rs 545
After a series of lower high lower low prices consolidated for almost one month and formed a basing pattern. Prices on the daily chart have given a double bottom pattern breakout on May 12 at 567 levels.
In this overall bearish market scenario, GUJGAS has outperformed the benchmark index on the absolute basis in the relative strength analysis. Prices have also closed above their 21 & 50-day exponential moving averages on the daily interval.
The pattern breakout is on a huge increase in volumes and a wide-ranged candle. Price also gapped above the neckline. The RSI (14) has also given a horizontal trend line breakout which is placed at 50 levels. Prices are most likely to trade higher due to these multiple bullish conditions.
Coromandel International: BUY
Target: Rs 936 | Stop Loss: Rs 847
Post the trend line breakout prices consolidated for a week and have completed its throwback near trend line support on the daily time frame.
In these throwback prices have taken support near their 21–day exponential moving average and closed successfully above the same. On the broader time frame too stock is poised to move higher as it is outperforming the Benchmark index and witnesses a higher high higher bottom formation.
(Rohan Patil is a Technical Analyst at Bonanza Portfolio. The views expressed are the author’s own. Please consult your financial advisor before investing)