The short term trend seems to have turned up, but near term negative set up is still intact. As long as the upper area of 9150-9180 is protected, we are unlikely to see any sustainable upmove above the resistance
- By Nagaraj Shetti
After showing an inside day type candle pattern on Tuesday, Nifty shifted into a firm upmove on Wednesday and closed the day higher by 2.11%. A long bull candle was formed on Wednesday, after a choppy movement of Tuesday. This could indicate an attempt of bulls to make a comeback from the lows.
After the downside breakout of sideways range movement on 18th May, the market failed to show follow-through weakness in the previous couple of sessions. The upside bounce of Wednesday could signal a possibility of false downside breakout. This false breakout could only confirm after a sustainable move above 9160 levels. Technically, such false downside breakouts tend to show sharp movement on the opposite side (upside in this case). Minor negative sequence like lower highs and lows continued on the daily chart and further upside from here could have another formation of lower high above 9150 levels.
Conclusion: The short term trend seems to have turned up, but near term negative set up is still intact. As long as the upper area of 9150-9180 is protected, we are unlikely to see any sustainable upmove above the resistance. Immediate support is placed around 8850-8800.
EMAMI LTD: BUY- (CMP Rs 204.60)
After showing a sharp weakness in the month of March 2020, the stock price (EMAMI LTD) witnessed an excellent upside bounce in the early part of April 2020 (formation of couple of long-range bull candles on the weekly timeframe chart). Formation of high wave candle pattern of last week, after reasonable declines of previous week could indicate a formation of bottom reversal pattern. This week’s upside bounce is likely to be a confirmation of higher bottom formation in the stock price. This is positive indication. Weekly MACD indicator makes an attempt to show positive crossover signal. This could mean further strengthening of upside momentum. Buying can be initiated in EMAMI LTD at CMP (204.60), add more on dips down to Rs 195, wait for the upside target of Rs 230 in the next 3-4 weeks. Place a stoploss of Rs 187.
CIPLA LTD – (CMP Rs 620.65)
After showing sideways range movement in the last one month, the stock price witnessed a sharp upside breakout during this week and closed higher. We observe an attempt of upside breakout of bullish flag type pattern around Rs 615-625 levels. Hence, a decisive move above this range could open up a sharp upside bounce in the stock price ahead. Volume expanded during recent upmove and weekly 14 period RSI shows positive indication. Buying can be initiated in CIPLA LTD at CMP (620.65), add more on dips down to Rs 585, wait for the upside target of Rs 675 in the next 4-5 weeks. Place a stoploss of Rs 575.
(Nagaraj Shetti is a technical analyst at HDFC Securities. Views expressed are the author’s own. Financial Express Online does not responsible for the recommendations, please consult your advisor before investing.)