By Rohan Patil
Bears continued to tighten its grip for the second straight week with a clear intense of selling at every higher tick in all the sectoral indices except nifty pharma. Benchmark on the weekly chart closed below four percent and also witnessed a closing below its 11 week low, indicating a strong profit booking or the first leg of correction phrase.
On the daily time frame prices closed below all the important averages and for the first time since June 20 prices closed below their 100-day exponential moving average, which can be considered as an alarming sign for the bull favored traders.
After a bearish pole flag pattern breakdown index has again given a bearish pennant pattern breakdown after two days of minor consolidation on the daily interval. Momentum oscillator RSI (14) has halted near 31 levels with bearish crossover but still has enough room to drift lower after minor pullbacks.
Also from the last couple of weeks are witnessing a continued selling from FIIs is also the major reason for the current fall in the Nifty.
A majority of the stocks are in the oversold zone a minor or a sharp pullback can be expected in the next couple of trading sessions. The immediate support for the Nifty50 is placed near 16800 & if prices break below these levels than 16500 will be the next level to watch for. The immediate resistance for the prices is capped near 17600 levels. If the prices close above 17600 convincingly then the gate is open at 18000 levels.
Bank Nifty after forming a bearish engulfing candlestick pattern in the last week of October prices underwent a strong sell-off with a three consecutive negative closing on the weekly time frame. The banking index is trading in a lower high lower low formation for the last four weeks, indicating an intermediate corrective trend.
On the broader timeframe charts, the index has given a bearish breakdown and an oversold rally cannot be ruled out in the coming trading sessions. Important Weekly Support is at 35000-34630 levels whereas on the upside resistance is near 37800-38200 levels. If the index manages to cross 38200 on a closing basis, we may see a northward journey till 39500 and on the downside, if the index closes below 34630, we may see further fall till 34000 odd zones.
CMP: Rs 1669 | Target Rs 1810 |Stop Loss Rs 1585| Return 08.50%
The prices were trading in a consolidation range since past six months and have formed a trend line resistance at 1660 levels.
ADANIENT has broken out of a rectangle pattern on the weekly time frame at 1670 levels on 11th Nov and the prices have registered a decisive breakout that suggests a change in the trend from sideways to upside. In this current bearish scenario, counter is outperforming the benchmark index and holding firmly above its support zone.
UNION BANK: BUY
CMP: Rs 43.70 | Target Rs 50.50 | Stop Loss Rs 40 | Return 15.50%
Post rectangle breakout UNION BANK has retested its trend line support and has completed its throwback of the bullish pattern on the weekly interval. Prices are holding firmly above its 100-week exponential moving average and momentum oscillator RSI (14) is reading above 50 levels. As stock has already corrected from the 54 levels and currently trading above its line of polarity, indicates a bottoming out structure 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)