By Rohan Patil
The benchmark Nifty 50 index started last week with a massive three per cent fall. As the week progressed, the index covered the majority of its losses and closed with a half-per cent loss on the weekly closing basis.
From the last four weeks, prices are trading between the ranges of 16800-17500 levels and whenever the prices dip near 16800 levels we witnessed strong support and a rebound in the prices.
Prices are continuously closing above their 61.80 per cent Fibonacci retracement on the weekly chart and it is acting as an anchor point for the index. Momentum oscillator RSI (14) has formed a double bottom formation on the weekly chart and the oscillator is hovering above 50 levels for the last four weeks without giving any clue of the further momentum in the prices.
On the daily time frame, Nifty 50 has closed below all its important exponential moving averages and due to the high volatility, prices are swinging like a pendulum without indicating a strong directional bias.
From here on 16800 levels will act as immediate support for the Nifty 50 and if prices slip below this level then 16500 will be the next support zone for the index. The upper band is capped near 17650 levels for the time being.
37000 to act as support for Bank Nifty
Bank Nifty is underperforming the benchmark index on the week on week basis and has closed below 38000 with a loss of more than two per cent.
The prices have closed marginally below their shorter degree upward slanting trend line on the weekly interval which is negative for the prices. Technically prices have formed an inverse wedge pattern on the weekly chart and if the banking index closed below the said pattern then a severe sell-off can be witnessed in the baking space.
The momentum oscillator RSI (14) has formed a double top pattern near 58 levels and has also given a negative crossover on the weekly time frame. The support for the banking index is placed near its previous resistance zone at 37000 levels and if a price breaks below this level then we may expect a strong round of selling, where else the upper band is capped near 38600 levels.
Target: Rs 583 | Stop Loss: Rs 526
On the Weekly chart DABUR has completed ‘Bullish AB=CD Harmonic pattern’; the coordinates of which are:
AB of the leg from 658.95 to 574.45 levels
BC of the leg completed at 625 (which is 61.80% of AB leg),
CD of the leg completed at 533.95 (which is 161.80% of the BC leg)
Prices are hovering near its 100-week exponential moving average on the weekly chart and it is acting as an anchor point for the prices. The momentum oscillator RSI (14) is reading at 42 levels and prices have retested near its PRZ (potential reversal zone) on the weekly time frame.
Based on the above Technical studies we can come out with a view that the price may move towards higher levels over a short period.
SUN PHARMA: BUY
Target: Rs 920 | Stop Loss Rs 827
The prices were trading in a cup and handle pattern for the past more than four months and have formed a trend line resistance at 850 levels.
SUN PHARMA has broken out of a cup and handle pattern at 893 levels on 04th Feb on the weekly chart and the prices have registered a decisive breakout that suggests a change in the trend from sideways to upside. From the last couple of weeks, prices have given a throwback near its trend line support, which is placed near 850 levels.
Stock is trading above its 21, & 50- 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 hovering 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.)