By Rohan Patil
Nifty 50 traded in steps formation last week, where it was continuously witnessing a lower close and was trading below its 50–day exponential moving average on the daily time frame. Just like in the previous four occasions prices retraced their gap either partially or fully and then began their lower high lower bottom trend on the daily time frame. The index has formed a small upward rising channel on the daily chart and prices are currently trading near the lower band of the pattern which is placed at 15950–15900 levels.
Last week the Benchmark index formed a bearish harami candle stick pattern on the weekly chart. And the closing below the bearish pattern in the coming weeks will be an added advantage to the pattern. The momentum oscillator RSI (14) on the daily chart has formed a double top formation near 60 levels and has currently hooked down near 50 levels.
Nifty faced a strong resistance near 16300 levels and witnessed a profit booked near a prior trend line resistance. In case prices break above 16300 levels then strong momentum can be seen in the prices towards 16500 levels. The immediate support for the Nifty is placed near 15800 and below that 15550 will act as major support for the Nifty.
Bank Nifty support at 34300
The Bank Nifty after forming a bearish ABCD harmonic pattern in the previous week prices were trading in a bearish tone for the entire week and closed below its 100-day exponential moving average on the daily scale. The upside gap which was formed on 7th July has partially filled on the daily chart.
Last week the Banking index has formed a bearish harami candle stick pattern on the weekly chart. And the closing below the bearish pattern in the coming weeks will be an added advantage to the pattern. The inside bar on the weekly chart suggests a decrease in volatility. The prices have taken resistance near the downward sloping trend line which is formed near 35400 levels on the weekly chart.
The Bank Nifty was not able to cross its previous intermediate high of 36083 levels and the momentum oscillator RSI (14) on the daily chart has formed a double top formation near 65 levels and has currently hooked down near 50 levels.
Bank Nifty faced a strong resistance near 35300 levels and witnessed a profit booked near a prior trend line resistance. In case prices break above 35300 levels then strong momentum can be seen in the prices towards 36500 levels. The immediate support for the Bank Nifty is placed near 34300 and below that 33800 will act as major support for the Bank Nifty.
INDUS TOWER: BUY
Target: Rs 243 | Stop Loss: Rs 219
The prices were consolidating within the levels of 205–220 levels for more than three months and have formed an accumulation pattern near the lower levels. INDUS TOWER on the daily chart has given an inverse head & shoulder pattern on the daily chart above 220 levels on 12th July. Post breakout prices consolidated for two days and gain resume their uptrend.
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 short to midterm. The momentum oscillator RSI (14) on the daily chart is reading in a higher low formation and has closed above 65 levels with positive crossover.
MINDA CORPORATION: BUY
Target: Rs 248.50 | Stop Loss: Rs 220
On a weekly timeframe, Minda Corporation showed a strong bounce on the upside in June 2022 by forming a Hammer candle, which took support from the trend line. The trend line was respected since November 2020. Prices in the previous week have sustained above 20 weeks’ simple moving average (SMA), which has always acted as a support to prices.
Around the level of Rs 180, we can spot a change in the polarity by the prices. We can spot prices that have crossed the very prior swing high from Rs 218 (May 2022) to Rs 163.5 (June 2022) which can negate the lower low, lower high formation pattern.
On the daily timeframe, we witnessed that prices crossed the hurdle of Rs 206.55 (May 18, 2022) this week which lead the Head and Shoulder pattern to fail.
(Rohan Patil is a Technical Analyst at Bonanza Portfolio. The views expressed are the author’s own. Please consult your financial advisor before investing.)