By Rohal Patil
The Nifty 50 registered its lifetime high of 15962.25 on July 16 and slipped almost 380 points or 2.46 per cent in the next two trading sessions. Benchmark Index witnessed a smaller degree V shape reversal on the daily chart after forming a low of 15578.55 on July 20, and post that recovered more than 2 per cent in just two consecutive trading sessions.
For the past seven weeks, the benchmark index had continued to trade in a narrow range horizontal channel pattern, on the daily charts. The width of the channel pattern is off almost three-fifty points where a lower band of the pattern holds support near 15600 levels and the upper band of the pattern is near 15950 levels.
If Nifty is able to break the upper band of the pattern which is placed near 15950 levels then prices may witness a major breakout which will help prices to cross above 16150 levels. Support for the Nifty is placed near 15768 – 15600 levels.
Bank Nifty – Bulls still in action
Bank Nifty registered its lifetime high of 37708.75 on February 16, 2021 and post that the index entered a correction phase. Despite the downside correction, Bank Nifty continues to trade in a higher low formation and made its intermediate low at 30405.65 on April 19, since then prices have recovered more than 18 per cent in just a period of three months.
Bank Nifty on the daily chart is trading within the rising channel pattern and currently trading near the lower band of the pattern. On the weekly chart banking index is trading above its upward rising trend line. The higher top higher bottom formation is well intact on the weekly chart indicates bulls are still in action.
If Bank Nifty is able to break the horizontal trend line resistance which is placed near 36000 levels then prices may witness a major breakout which will help prices to cross above 37500 levels. Support for the Bank Nifty is placed near 33900 levels.
Stocks to Buy
Target – Rs 1365 | Stop Loss Rs 1225
The prices were trading in a range of 1100 to 1200 for the almost two months and have formed rectangle pattern formation on the daily chart. Tata Steel has broken out of a rectangle pattern at 1244 levels on July 9, and the prices have registered a decisive breakout that suggests a change in the trend from sideways to upside. In these recent correction prices have completed its throwback near its tend line support which is placed near 1230 levels.
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 positive crossover above its signal line. Momentum oscillator RSI (14) is reading near 60 levels which indicates positive momentum will like to continue ahead.
Target – Rs 680 | Stop Loss Rs 622
Prices traded in a narrow range between 607 – 633 levels on the daily chart and formed a resistance zone around 633 – 635 levels.
ICICIPRU has witnessed a horizontal trend line breakout on the daily time frame and the prices are trading above their trend line resistance. Prices are also trading above their short & medium-term exponential moving average which is positive for the prices.
When we observe volume activity there has been above-average volume on the day of the breakout which confirms price volume breakout on the daily time frame. Momentum oscillator RSI (14) is reading above 60 levels with positive crossover on the daily scale, which indicates the uptrend may resume soon.
Crude Oil outlook
WTI CRUDE OIL has been on an upward trajectory since April 2021. On the weekly chart, WTI CRUDE OIL prices have formed a bullish hammer pattern (bullish reversal) where prices have shown a sharp recovery in the last couple of trading sessions and have formed along trailing tail in the candle. MCX Crude oil has formed a bullish morning star pattern on July 20, 2021, and currently trading above the bullish pattern on the daily scale.
On the weekly chart, WTI CRUDE prices are trading above their upward rising trend line and continue to trade in a higher high higher low formation, which is technically a bullish structure for the Oil prices. The momentum oscillator RSI (14) is reading at 51.65 levels and has witnessed a sharp reversal from 40 levels on the daily time frame. Demand growth is expected to outpace new supply, following the agreement by the Organization of the Petroleum Exporting countries and allies, known as OPEC+, to add back 400,000 barrels per day each month from August through December. The near-term support for the WTI Crude Oil prices is placed near $68 & $66 levels (MCX 5200 & 5000 levels), where resistance is capped near $75.50 levels (MCX 5630 levels).
(Rohan Patil is a Technical Analyst at Bonanza Portfolio Ltd. The views expressed are the author’s own. Please consult your financial advisor before investing.)