By Rohan Patil
In the past, three to four occasions whenever the Nifty enters a correction phase, the 21-day exponential moving average has acted as an anchor point for the index. On the open interest front, good participation and open interest addition were seen in the 18000 Call and 17800-17700 Put contracts. Thus, we can expect the broader range of the index to 17700-18000 levels. And recently index has whipsawed its bearish engulfing candlestick pattern on the daily chart and has successfully closed above the high of the pattern. Whenever we saw a failure of a bearish pattern in the index he has witnessed a much stronger trend on the higher side.
Nifty IT and Nifty Auto index has given a four per cent each return where Auto index has given a breakout of a channel pattern and IT index has given a V-shape reversal rally on the daily time frame and both the index are expected to outperform in the coming weeks. While Nifty Metal & FMCG index traded flat and closed within their previous week’s range. The realty index continues its breakout trend and is close to three per cent higher on the weekly time frame.
As the index is on the verge of the breakout every dip should be utilized as a buying opportunity. If Nifty 50 breaks above 18000 levels then the gate for the prices will be open till 18350 – 18500 levels. Strong support is placed near 17600 – 17550 levels near its 21 DEMA.
Bank Nifty continues to trade above 37000 levels from the last four weeks and has also been able to close above its horizontal trend line support on the weekly time frame. After forming a bullish hammer candlestick pattern on the daily chart prices have never retested the low of the pattern and traded higher amid volatility on the daily time frame.
Banking Index continues to trade within the rising channel pattern with the higher top higher bottom formation. The index was also able to close above its 21-day exponential moving average which is positive for the prices.
The Momentum oscillator RSI (14) is also sustaining above 60 levels with bullish crossover indicates upside momentum may resume soon. Currently, the Banking index is trading above its Parabolic SAR indicator on the weekly chart which is placed near 36900 levels. Major resistance is placed near 38200 levels & on the downside; if prices break below 36900 then we may test 36000 levels.
CMP: Rs 1,281 | Target Rs 1,345 | Stop Loss Rs 1,240
The prices were trading in a range of 1200 to 1260 for almost one month and have formed flag pattern formation on the daily chart. VOLTAS has broken out of a flag pattern at 1283 levels on 07th Oct 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 daily time frame, which is positive for the prices in the near term.
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.
CMP: Rs 7,430 | Target Rs 8,030 | Stop Loss Rs 7,130
MARUTI has given a spectacular rally from the low of 4001 on April 3 last year, to a high of 8329 on January 15, 2021, and post that rally prices went in a sideways consolidation for almost eight months and traded in a range between 6600 to 7200 levels.
MARUTI has formed a symmetrical triangle formation on the weekly chart within that eight months period and finally broken out of a symmetrical triangle pattern at 7430 levels on 08th Oct 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 a weekly 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 near 60 levels with positive crossover on the weekly scale.
(Rohan Patil is a Technical Analyst, Bonanza Portfolio Ltd. Views expressed are the author’s own. Please consult your financial advisor before investing.)