By Rohan Patil
Benchmark index closed in the green for the second consecutive week after forming a bullish harami candlestick pattern in its previous week’s candle. A positive closing after forming a bullish candlestick pattern indicates a confirmation for the said pattern.The lower high lower low formation will be neglected only above 17700 levels till then this can be considered as a short term pullback. On the weekly chart, prices have found support near their 21-week exponential moving average which is acting as an anchor point for the index.
On the options, open interest front, (December 16, 2021) highest open interest addition was seen in the 18500 Call and 2nd highest open interest addition was seen in the 17200 Put contracts, thus we can expect the broader range of the index to be 17200-18500. A momentum oscillator RSI (14) and stochastic have suggested positive crossover on the daily chart. Nifty has reached a good hurdle zone of 17600, if it manages to sustain above the said levels than 18000 will be the next level for the index. The immediate support is coming near 17100 & 16900 levels.
Bank Nifty approaching pullback zone
The nifty bank has seen a stunning recovery but still trades below its 20 & 50 days EMA. In the previous week, the index took support from its 200 days EMA, and bulls are trying to make a comeback after relentless selling in the index. Currently, the index is trading near 37,100 and has respected the long-term trend line. As we can observe on the above weekly chart prices have given the breakdown of a falling channel pattern and the prices are approaching near its pullback zone which is placed near 37500 – 38000 levels.
Indicators are suggesting a pullback is on cards if the index sustains above 37500-37700 zones. MACD has started to rise but still not crossed its 0 lines. Daily ADX is at 28 and beginning to flatten expecting consolidation in the near term. RSI has improved its reading as compared to the previous week but is still below 50 and mimicking the price action. Important supports are now at 36850-36600 and resistance is placed near 37600-37700 which is also the 50 day EMA.
Glaxosmithkline Pharmaceuticals: BUY
CMP: Rs 1882 | Target: Rs 2040 | Stop Loss Rs 1780
Return: 08.40%
The prices were trading in a rectangle formation for the past one year and have formed a trend line resistance at 1750 levels. GLAXO has broken out of a channel pattern at 1825 levels on 06th Dec and the prices have registered a decisive breakout that suggests a change in the trend from sideways to upside. From the last two trading sessions, prices have given a throwback near its trend line support, which is placed near 1760 levels.
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 65 levels which indicates positive momentum will like to continue ahead.
National Aluminium: BUY
CMP: Rs 98.95 | Target Rs 107.50 | Stop Loss Rs 93
Return: 08.60%
The stock was trading in a lower low lower high formation since last two months and has formed a falling wedge formation on the daily time frame. On the 8th Dec Prices has given a breakout of a falling wedge pattern and stock has able to close above its 21 & 50 – day exponential moving averages.
Momentum oscillator RSI (14) has given a falling trend line breakout above 50 levels with bullish crossover on the cards. Higher high higher low pattern is well intact on the broader time frame indicates a bottoming out structure on the lower time frames.
(Rohan Patil is a Technical analyst at Bonanza Portfolio. Views expressed are the author’s own. Please consult your financial advisor before investing.)