By Rohan Patil
It was a bear controlled week for the Indian bourses where prices closed in red for the four consecutive days and lost almost 500 points after registering a lifetime high of 18604.45 on October 19. On the daily chart prices are trading within the rising channel pattern with a higher high higher bottom formation on the cards. The index has able to close above the lower band of the pattern and the upward slanting trend line is acting as an anchor point for the prices.
If we draw an upward rising trend line from the low of 15513 on July 28 and connect it to October 1 low which is 17452 then the next support for the prices is placed at 18000 levels which is the next point of the trend line support. And the lower band of the trend line is also supported with a 21-day exponential moving average on the daily time frame.
Benchmark index has formed bearish dark cloud cover candle stick pattern and drift more than one percent on the weekly closing basis. The momentum oscillator RSI (14) has shown a negative divergence at over bought levels where prices has made a new high but oscillator failed to do so near 75 levels on the weekly interval.
INDIA VIX index has witnessed a breakout of a smaller degree horizontal trend line above 16 levels and facing a stiff resistance near its 200 –week exponential moving average. If VIX index continues to close above the 15 levels we may continue to witness volatility in the coming trading sessions.
As prices have taken support near the lower band of the pattern which is placed near 18050 -18000 levels. If index breaks below 18000 levels then the gate is open for 17750 levels. The resistance is pegged near 18500 levels if the price successfully breaks the above level then a new high will be on the cards for the Benchmark index.
Banking index traded with a bullish bias and outperformed the benchmark index and has given a two and half percent return on the weekly chart. Bank Nifty has given a pennant pattern breakout on the daily chart.
Prices have given an ascending triangle pattern breakout on the weekly chart and continue to trade higher post breakout. The Momentum oscillator RSI (14) is also sustaining above 70 levels with bullish crossover indicates a strong upside momentum. Currently, the Banking index is trading above its Parabolic SAR indicator on the weekly chart which is placed near 37750 levels.
The MACD indicator is reading above its line of polarity and continuously reading above 9 period signal lines.
The banking index has given a return of almost 10 percent since 1st Oct, indicates a strong outperformance in the banking index. Major resistance is placed near 41200 levels & on the downside; if prices break below 39800 then we may test 39000 levels.
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The stock on the weekly timeframe is forming a higher high higher low price pattern since the March 2020 lows and has given an ascending triangle breakout with rising volumes.
The stock traded in a narrow of above 70 points for almost 18 months and witnessed a strong breakout which forced prices to close above its 100 –week exponential moving average on the weekly time frame.
On the indicator front RSI (14) closed above 70 levels indicates a strong momentum on the higher side with positive crossover. The dip in the Friday’s trading session can be utilized as fresh buying opportunities.
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The stock is trading in a higher high higher bottom formation on the daily time frame indicates a progressive uptrend in the counter.
Prices are trading within the rising channel pattern and the lower band of the pattern is supported with a 21-day exponential moving average.
On the indicator front, momentum oscillator RSI (14) is hovering near 60 levels and has found support near its previous support zones. The recent dip in the prices can be utilized as a fresh buying opportunity in the counter.
(Rohan Patil is a Technical Analyst at Bonanza Portfolio. Views expressed are the author’s own. Please consult your financial advisor before investing.