By Rohan Patil
In terms of candlestick, prices have formed a bullish harami pattern and prices have been able to close just near their 21-week exponential moving average on the weekly interval. The bullish harami candlestick pattern requires confirmation in the coming weeks with closing above the pattern. Nifty 50 on the daily chart continues to trade in a lower low lower high formation since 19 Oct and the current chart formation indicates bear favor trend. Even momentum oscillator RSI (14) is reading near 54 levels with bearish crossover and continues to read in a lower low formation.
The Benchmark index is facing a strong resistance of a moving average cluster on the daily chart where 21 & 50 DEMA are placed near 17521 & 17563 levels respectively. And the support for the index is placed at 16800 levels for this coming week.
Bank Nifty witnessing selling pressure
The nifty bank has been witnessing selling pressure since last month and there is no respite seen whatsoever. All the rallies are being sold into and a bearish crossover is seen of 21 days and 50 day EMA which indicates weakness in the near term.
Currently, the index is trading at 36,197 and had taken support of 200 days EMA earlier in this week. The index is also near its long-term trend line and it will be interesting whether this trend line is respected or not. A breach of this trend line will mean that selling can persist in upcoming trading sessions.
Indicators are suggesting that the index is oversold where RSI is showing a reading of 34 and a weekly MACD bearish divergence is spotted. MACD has made a lower high and prices had made a new high which tells us that price will tend to revert back to its mean. The daily ADX is showing a reading of 33 and is rising which means the trend is still strong and is likely to continue.
Important supports are placed at 35,300-35,700 and Resistance is placed near 36,500-36,800. The 21 Day EMA is at 37,420 and 50 Day EMA is at 37,770 which will be a key resistance zone in the near term.
BAJAJ Holdings & Investment: BUY
Target: Rs 5900 | Stop Loss: Rs 5100 | Return 09%
The prices were trading in a rectangle formation for the past two months and have formed a trend line resistance at 5030 levels.
BAJAJ HOLDING has broken out of a rectangle pattern at 5100 levels on 01st Dec 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.
Target: Rs 395 | Stop Loss: Rs 325 | Return 13%
Post rectangle breakout ZEEL has retested its trend line support and has completed its throwback of the bullish pattern on the daily interval.
Prices are holding firmly above its 100-week exponential moving average and momentum oscillator RSI (14) is reading above 60 levels. As stock has already corrected from the 349 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.)