By Rohan Patil
We have again witnessed a sharp trend reversal rally in the benchmark index from 16410.20 levels to 17944 levels with a return of 9 percent in just eleven trading days. Previously on a couple of occasions, we have seen the same sharp ‘V’ shape reversal rally in the index and post that prices have registered a new lifetime high. The Nifty 50 on the daily chart has given a falling wedge pattern breakout and prices have successfully closed above its trend line support. The previous week’s prices were under a bit of pressure and were trading below its 21 & 50-day exponential moving average but a strong breakout in the current week has forced the prices to close above the said averages on the daily time frame.
On the indicator and oscillator front, RSI (14) and MACD are favoring the bullish momentum and have closed above its resistance levels on a daily scale. The prices on the daily chart are trading in a higher top higher bottom formation and indicate a reversal of a trend from bearish to bullish.
In the upcoming week, prices are most likely to face a strong resistance near 18200 levels and above those 18350 levels. While 17500 levels will continue to act as immediate support for the benchmark index and if prices breach that level then 17200 will be the next level to watch out for.
Will Bank Nifty outperformance continue?
Bank Nifty has outperformed the benchmark index in this current week and has given a return of above six percent on a weekly closing basis. The prices have also given a trend line breakout which was placed at 37200 levels and has closed above the same. 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.
The breakout on the daily chart is confirmed with an above-average price volume and in addition, prices have also closed above their 21 & 50- day exponential moving averages on the daily time frame. Momentum oscillator RSI (14) has also given a breakout of a horizontal trend line which was placed at 55 levels on the daily chart with positive crossover.
Important supports are now at 37000-36700 and resistance is placed near 38800-39200. The index is in a pullback mode and appears to be in the same lines for the next week too.
Target: Rs 1340 | Stop Loss: Rs 1230 | Return: 05.40%
VOLTAS was trading in a broad range of 1170 – 1240 from last three months and has formed triangle pattern on the daily time frame. On the 07th Jan prices have witnessed a breakout of a triangle pattern at 1250 levels.
Stock is trading above its 21, 50 & 100- day exponential moving averages on a daily time frame, which is positive for the prices in the near term. When we observe volume activity there has been above-average volume set up from the past couple of weeks on the daily chart, which indicates accumulation phrase. Momentum oscillator RSI (14) is reading above 60 levels with positive crossover on the daily scale.
ICICI BANK: BUY
Target: Rs 833 | Stop Loss: Rs. 769 | Return 05%
The prices were trading in a rectangle formation for the past one and half month and have formed a trend line resistance at 780 levels.
ICICIBANK has broken out of a channel pattern at 772.85 levels on 05th 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 above 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.)