The momentum oscillator RSI (14) has formed a bullish hidden divergence where RSI has made a made low and prices did not register a new low on the weekly time frame.
By Rohan Patil
Benchmark index continues to trade in a higher high higher low formation and has taken a support near its lower band of the channel pattern on the weekly time frame. On Friday prices witnessed a sharp reversal from its lower band of the flag pattern on the daily interval and closed above its 21-day exponential moving average. Overall, it was a very volatile week where prices swing both the ways with a tilt of bearishness but finally index closed one percent higher on the weekly chart due to a strong recovery on the Friday’s session.
The momentum oscillator RSI (14) has formed a bullish hidden divergence where RSI has made a made low and prices did not register a new low on the weekly time frame. And prices continue to trade above it’s all the major averages on the weekly chart indicate a strong ongoing bullish trend.
The immediate support for the Nifty50 is placed near 17800 & if prices break below these levels than 17600 will be the next level to watch for. The immediate resistance for the prices is capped near 18300 levels. If the prices close above 18300 convincingly then the gate is open 18600 levels.
Bank nifty on the weekly charts has taken support from 10 weekly EMA which has been one of the important averages if we follow the trend from March 2020 lows. The index continues to respect that line and has given a small pullback in today’s session. Currently the index is trading at 38750 levels. It has relatively underperformed when compared to Nifty which is a sign that buyers are still not confident with buying in banking names.
On the longer timeframe charts, index still looks strong and such routine profit booking is bound to happen whenever indices tend to be in overbought zones. Important Weekly Support is at 37700-38000 levels whereas on the upside resistance is near 39400-39600 levels. If the index manages to cross 39800 on closing basis, we may continue northward journey till 40200 and on the downside if index closes below 38400, we may see further fall till 37700 odd zones.
On the indicator front, the weekly RSI has cooled off and showing a reading of 61 whereas the MACD is still showing no signs of weakness. On the ADX front, the strength of the trend still remains intact and is showing a reading of 30.71.
CMP: Rs 510.55 | Target Rs 552 | Stop Loss Rs 486
PRESTIGE was trading in a broad range of 410 – 501 from last three months and has formed rectangle pattern on the daily time frame. On the 09th Nov prices have witnessed a breakout of a rectangle pattern at 514.85 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.
LG Balakrishnan & Bros: BUY
CMP: Rs 533.80 | Target Rs 590 | Stop Loss Rs 507
The prices were trading in a rounding bottom formation since August and have formed a bullish cup and handle pattern on the daily time frame.
On November 1, stock witnessed a gap up opening and gave a breakout above the neck line of the cup & handle pattern and registered a decisive breakout from a bullish formation.
In the last four trading sessions prices have completed its throwback near its horizontal trend line and prices are geared to trade higher. Momentum oscillator RSI (14) is reading near 60 levels indicates a bullish momentum in the counter.
(Rohan Patil is a Technical Analyst at Bonanza Portfolio. Views expressed are the author’s own. Please consult your financial advisor before investing.)