By Rohan Patil
On the daily chart, prices have given a falling wedge pattern breakout on January 3, 2022, and have given a return of 3.60 per cent to date without a meaningful correction. Meanwhile on the broader time frame (weekly) prices have given a bullish flag pattern breakout and prices are inching near their previous lifetime high levels which are placed at 18600 levels. The structure of the index was in favor of bulls and market breadth for the entire week has remained at 2:1. The prices on the daily chart are trading in a higher top higher bottom formation.
In the recent price correction momentum oscillator RSI (14) dipped to 50 levels and has formed a double bottom formation on the weekly time frame. After a double bottom formation in the oscillator, both prices and indicator headed towards the south and has also given a positive crossover by closing above its 21DMA.
Nifty 50 is most likely to cap near its previous resistance zone which is placed at 18600 and if the index manages to cross above the said level then 19000 will be on the cards soon. The immediate support for the index is placed near 18000 & 17900 levels.
Bank Nifty upside capped?
It’s a third straight week where the banking index closed in the green and has given a 10 per cent return in the last three weeks which indicates a strong turnaround in the overall banking space. Prices have retraced 61.80 per cent from the top of 41829 to the recent low of 34018.45 levels. 61.80 per cent retracement at the current level indicates a short term or an immediate resistance for the bank nifty.
After nine consecutive days of Bull Run prices mark its first red candle on January 13 and has closed its runaway gap created on January 12 indicating a temporary topping out structure in the daily time frame.
Bank Nifty after forming a hammer candlestick pattern on the weekly chart prices have shown a strong reversal on the higher side and have taken support at its 21-week exponential moving average on the weekly chart. Important supports are now at 37600-37200 and resistance is placed near 39200-39500.
TATA MOTORS: BUY
Target: Rs 548 | Stop Loss: Rs 485
The prices were trading in a symmetrical triangle formation for the past one and half month and have formed a trend line resistance at 498 levels.
TATAMOTORS has broken out of an upper band of the pattern at 503.70 levels on 10th Jan 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 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.
INDUS TOWER: BUY
Target: Rs 300 | Stop Loss: Rs 260
The stock has been trading in a lower low lower high formation since past three months and has formed a falling wedge formation on the daily time frame.
On the 12th Jan Prices has given a breakout of a downward sloping trend line which was connected to a falling wedge pattern and stock has able to close above its 21 & 50 – day exponential moving averages.
The bullish breakout in the lower low lower high formation indicates a positive surge in the upside. 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. Views expressed are the author’s own. Please consult your financial advisor before investing.)