By Rohan Patil
Nifty 50 index, on Friday, witnessed a massive gap up opening above its consolidation range but couldn’t hold on to its early gains and lost more than 150 points from the day’s high but still managed to close 1 per cent higher on the weekly chart. The prices have found support near their 21-exponential moving average and other than that index continues to trade above its all-important averages on the monthly chart. Prices have formed a bullish hammer candle stick pattern on the monthly chart and it will be interesting to watch its next month’s candle for confirmation.
The momentum oscillator RSI (14) on the monthly has made a top near 80 levels and since then it decline lower below 65 levels. The oscillator on the monthly scale has made a topping formation and indicates a momentum can drift lower.
Nifty faced a strong resistance near 16800 levels and witnessed a sell-off from its prior trend line resistance. In case prices break above 16800 levels then strong momentum can be seen in the prices. The immediate support for the Nifty is placed near 16445 and below that 16300 will act as major support for the Nifty.
Bank Nifty support placed near 34800
Similar to the benchmark index, Bank Nifty too witnessed a strong gap up opening at the start of the week but traded with a negative bias through the week and closed 1 per cent lower on the weekly chart.
Bank Nifty on the daily chart has faced a strong resistance near its 100 – day exponential moving average which is placed at 35950 levels. The Banking index is currently trading within the band of 21 & 100 DEMA and is acting as a strong anchor point for the index.
The momentum oscillator is reading in a higher high higher low formation on the daily chart and has sustained near 50 levels. The MACD has given a crossover above its line of polarity on the daily chart and the trend still indicates upward bias.
The immediate support for the Bank Nifty is placed near 34800 and below that 34500 will act as major support for the Bank Nifty. The immediate resistance for the Bank Nifty is placed at 35950 levels where 100-day exponential moving average is settled.
Union Bank of India: BUY
Target: Rs 41.10 | Stop Loss: Rs 37
Union Bank consolidated for more than three weeks within the range of 35-37.50 levels forming a basing formation and creating an accumulation pattern. The prices witnessed a consolidation range breakout on 30th May and closed above their trend line resistance.
Momentum oscillator RSI (14) witnessed a sharp reversal from the oversold levels and since then was hovering within the 35-45 levels. Recently the RSI has also witnessed a range breakout above 50 levels with positive crossover on the daily time frame.
The MACD indicator has shown an early reversal by crossing above its signal line which is below its line of polarity. The prices are also sustained above their 21-day exponential moving average. The counter is also trading near the upper band of the Bollinger band indicating a possible continuation of the uptrend after the recent consolidation.
Torrent Power: BUY
Target: Rs 489 | Stop Loss: Rs 450
Prices have formed a smaller degree rounding bottom formation on the daily chart and prices have also given a breakout of a trend line resistance on the daily time frame.
In the recent correction, prices have taken strong support near the 100 – week exponential moving average which is placed near 442 levels. On the daily chart also prices have closed above its 21 DEMA which is positive for the prices in the short term.
Momentum oscillator RSI (14) has shown a strong rebound on the daily chart from the oversold values and currently has closed above 50 levels with bullish crossover.
(Rohan Patil is a Technical Analyst at Bonanza Portfolio. Views expressed are the author’s own. Please consult your financial advisor before investing.)