When we analyze the weekly chart Nifty has given a bullish pole flag pattern breakout and higher high higher low formation is likely to continue ahead.
By Rohan Patil
Benchmark Index traded in a narrow range of 15550 and 15950 levels for almost eight weeks and formed a channel pattern on the daily time frame. The index finally broke its consolidation range on the higher side and witnessed a channel pattern breakout on 3rd August and registered a lifetime high 16349.45 levels on August 5. Nifty 50 has given a 3.01 per cent returned on the weekly chart, which indicates a very strong consolidation breakout.
When we analyze the weekly chart Nifty has given a bullish pole flag pattern breakout and higher high higher low formation is likely to continue ahead. Momentum oscillator RSI (14) has also given a horizontal trend line breakout at 63 levels and currently closed 69 levels with bullish crossover on the weekly interval.
Since the index is trading in uncharted territory, using Fibonacci extensions suggests 16500 will be the next resistance for the index, and on the downside; supports are placed near 15950 which was the previous resistance zone.
Nifty FINANCIAL Index witnessed a consolidation breakout that generated 4.05 per cent returns for the week and it is the leading gainer among all indices. Nifty IT Index continued to close higher for the fourth straight week rose 2.70 per cent for the week. The Index’s which underperformed or closed in red for the week is the Nifty Media Index which drifts for more than four per cent and closed below its 50- DMA.
Bank Nifty on August 6, started the day with a gap-up opening but was unable to surpass the psychological level of 36000 on a closing basis. In the previous 3 trading sessions, we witnessed selling pressure near 36000-36200 zones.
Reading the option chain data, we see that maximum call writing has taken at 36000 strike price which will be crucial in upcoming trading sessions. If the price is able to sustain this zone we may see an upswing till 36550 levels. On the Put side, maximum OI is at 35500 and 35000 levels respectively which will act as immediate support.
On the indicator front, MACD has given a positive Crossover which indicates that the move is likely to continue northward. The daily RSI is at 60 which mean that the index has still not reached overbought levels and the upside is likely to be seen. ADX (14) shows a reading of 17 and is rising which explains the strength of the trend will continue.
Currently, the index is trading above its major exponential moving averages. Major resistance is placed near 36500 levels and on the downside, major support zone is at 33500 on the weekly charts.
HCL Technologies: BUY
CMP: Rs 1050 | Target Rs 1147 |Stop Loss Rs 1005
HCL Technologies has given a spectacular rally from the low of 375 on 20th March 20, to an all-time high of 1067 on 15th Jan 2021, and post that rally prices went in a sideways consolidation for almost six months and traded in a range between 1040 to 950 levels.
HCL Tech has formed a triangle formation within that six months period and finally broken out of a triangle pattern at 1061 levels on 05th Aug 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 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.
CMP: Rs 2365 | Target Rs 2530 | Stop Loss Rs 2270
The prices were trading in a range of 2160 to 2290 for almost two months and have formed triangle pattern formation on the daily chart. HEG has broken out of a triangle pattern at 2347 levels on 02nd Aug 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 daily time frame, which is positive for the prices in the near term. MACD indicator is reading above its centerline with 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 Ltd. Views expressed are the author’s own. Please consult your financial advisor before investing.)