- The ‘RSI-Smoothened’ for Nifty on the weekly timeframe chart has started moving northwards after entering a bullish territory above the 70 mark, which is likely to provide the impetus.
Although Nifty could reclaim 12,000 in the week gone by, the momentum was lacking as the benchmark looked a bit tentative around these levels.
For the index-specific traders, it was clearly a dull week as we witnessed a lot of choppy trades with no clear direction.
Eventually, Nifty ended the week with a gain of more than a percent.
Now, let’s understand why 11,650 – 11,600 is considered to be strong as well as a crucial support zone.
If we connect all major highs from the record highs in descending order, the trend line or pullback support comes around this level, which coincides with the 20-day EMA as well.
Hence, as long as this support is not violated, one should adopt a ‘buy on dips’ strategy. A close below 11,650 – 11,600 would result in a short-term trend reversal and hence, traders should start lightening up positions after it.
Before this, intermediate supports are at 11,820 – 11,775. Now, we are a tad below 12,000 and we expect Nifty to surpass 12,000 – 12,050 levels in the coming days to head towards 12,200 – 12,400.
The ‘RSI-Smoothened’ for Nifty on the weekly timeframe chart has started moving northwards after entering a bullish territory above the 70 mark, which is likely to provide the impetus.
After a long underperformance, banking started to show strength. When financial starts participating in any rally, it is considered to be the robust one.
The ‘ADX 14’ indicator on the daily chart is moving northwards after surpassing the 25 mark. This development generally unfolds a big trended move.
The undercurrent is strong and we are seeing different sectors participating one after another and the way the Midcap index is poised, another up-move of a percent from here on would confirm a strong breakout in the Nifty Midcap 50 index.
Considering all this, odds are very much in favour of the bulls. Since we are approaching a mega global event (US Presidential election), we may see some volatility increasing and hence, keep a regular tab on all
above mentioned levels.
Here are two buy calls for this week:
Bharat Forge | LTP: Rs 494 | Target price: Rs 530 | Stop loss: Rs 464 | Upside: 7%
After a spectacular rally in July-August, the auto and auto ancillary space went into a consolidation mode.
However, last Friday, almost all stocks from this place took off and kept buzzing throughout the day.
Bharat Forge, in the last couple of months, had more of a time-correction than the price-correction.
It rested around the 89-EMA on the daily chart for some time and finally, witnessed a huge breakout from the consolidation phase along with sizable volumes.
On the weekly timeframe, the stock is yet to surpass the 200-SMA, but the way it is placed now, we expect it to go beyond Rs 520 – 530 in this leg of the rally.
We recommend going long on a minor dip towards Rs 488 – Rs 483 for a target of Rs 520 - 530 in the coming days.
CEAT | LTP: Rs 1,119 | Target price: Rs 1210 | Stop loss: Rs 1062 | Upside: 8%
This stock was once considered traders’ favorite, but ever since it was excluded from the F&O universe, it mostly remains unnoticed.
But the way this stock posted a decent rally last Friday, to confirm a weekly breakout, it would really be unfair not to cover this stock in a recommendation list.
In this pandemic time, the stock seems to have formed a strong base and has gradually developed a price configuration that resembles a ‘Bullish Saucer’ pattern.
This is known as a good ‘accumulation’ pattern and a breakout above this with volumes is likely to provide thrust in the coming days.
(The author is Chief Technical & Derivatives Analyst at Angel Broking)
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