By Rohan Patil
It was a bear-dominated week for the benchmark index where four out of five trading days closed in a red and formed a three-black crow bearish candlestick pattern on the daily time frame. On Friday, January 21, Nifty recovered 50 per cent of its fall and formed a long leg Doji candlestick pattern on the daily interval. In the past four weeks, Nifty50 rallied almost 2100 points and in the recent week, we witnessed a fall of almost 750 points which is 38.20 per cent retracement of the rally which started from 16400 levels till 18350 levels.
In the last week, both FIIs and DIIs were the net sellers in the market and one of the primary reasons for the fall in the market. The index has also formed a bearish alternate shark harmonic pattern on the daily chart and prices have closed below its PRZ (potential reversal zone) levels.
The Nifty 50 on the weekly chart has given a bullish pole flag pattern breakout and the throwback of the pattern was awaited. The current fall can be considered as a throwback of the broader pattern which is likely to find support near the upper band of the flag pattern which is placed near 17450 levels.
Presently the support for the benchmark index is 17480 and 17360 which is supported with 100-day exponential moving averages and the resistance for the index is capped at 18000 and 18150 levels.
Bank Nifty support at 37000
The nifty bank has given a negative closing last week with increased volatility due to global macroeconomic data impacting the domestic markets. Currently, the index is trading at 37,574 and above its 21 weekly EMA which is placed at 36,930. In the previous fall, the index took support near 50 weekly EMA and rallied almost 4,500 points so this can be a pause in the ongoing trend.
37,000 will be seen as good support, following which 36,500 will act as strong support. On the upper side, 38,200 will act as immediate resistance post which 38,800 will be the next hurdle. If the fall continues which looks likely looking at the global cues then, 50 weekly EMA will hold crucial which is placed at 35,200. Moreover, markets will also react to the earnings of ICICI Bank which is a heavyweight counter in the banking index in early trade on Monday.
On the indicator front, momentum oscillator RSI is showing a reading of 53.9 which is still healthy. The MACD is still trading marginally above its 0 lines and is showing some sort of fatigue. ADX which shows the strength of the trend is flat, indicating a sideways trend.
Target: Rs 345 | Stop Loss: Rs. 310 | Return: 7%
The prices were trading in a symmetrical triangle formation for the past four months and have formed a trend line resistance at 300 levels.
SPARC has broken out of a symmetrical triangle pattern at 327 levels on 07th Jan and the prices have registered a decisive breakout that suggests a change in the trend from sideways to upside. From the last two weeks, prices have given a throwback near its trend line support, which is placed near 310 levels.
Stock is trading above its 21, 50 & 100- day exponential moving averages on the daily time frame, which is positive for the prices in the near term. The MACD indicator is reading above its centerline with a positive crossover above its signal line. Momentum oscillator RSI (14) is reading near 60 levels which indicates positive momentum will like to continue ahead.
KIRI INDUSTRIES: BUY
Target: Rs 572 | Stop Loss: Rs. 495 | Return: 9.50%
The prices were trading in an inverted head & shoulder formation for the past three months and have formed a neck line resistance at 505 levels.
KIRI INDUSTRIES has broken out of an inverted head & shoulder pattern and the prices have registered a decisive breakout that suggests a change in the trend from sideways to upside. From the last three to four trading sessions we have observed an above average volume activity in the counter which also suggests price volume breakout on the daily time frame.
Stock is trading above its 21, 50 & 100- day exponential moving averages on the daily time frame, which is positive for the prices in the near term. The MACD indicator is reading above its centerline with a positive crossover above its signal line. Momentum oscillator RSI (14) is reading above 60 levels which indicates positive momentum will like to continue ahead.
(Rohan Patil is a Technical Analyst at Bonanza Portfolio. Views expressed are the author’s own. Please consult your financial advisor before investing.)