#39;Nifty may stretch towards 12,400 if it keeps trading above 12,320#39;
Nifty continues to establish higher highs to hit a fresh all-time high of 12,338. Further, it managed to close beyond the cluster of recent highs formed between 12,290 and 12,300, suggesting sustained bullishness in the coming trading session.
A constant trade above 12,320 will extend the gains to levels of 12,370-12,400 which happens to be the upper end of the rising channel.
On the flip side, a trade below 12,290 may halt the ongoing bullish trend triggering corrective wave to levels of 12,260-12,210.
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The stock has resumed its upward journey after breaking out of a trendline resistance on higher than average volumes. A sustained trade above Rs 850 will take it higher to levels of Rs 910-935.
Further, on higher time frame charts, it is on the verge of a breakout from a bullish flag pattern, neckline is placed at Rs 850. A close beyond the neckline will resume the upward journey taking it higher.
RSI has formed a positive reversal with respect to price and turned north from the 60-level which confirms the positive trend. The stock may be bought in the range of Rs 836-840 for targets of Rs 910-935, keeping a stop loss below Rs 800.
The stock has broken out from an ascending triangle neckline triggering resumption of the bull trend. Further, the breakout is backed on extremely healthy volumes suggesting an extension of the uptrend.
On the daily chart, it is forming higher highs and higher lows breaking out of the range which confirms the bullishness. Further, it is trading above all its major moving average which is a bullish signal.
Technical indicators are also favouring the bulls indicating extended bullishness. The stock may be bought in the range of Rs 700-705 for targets of Rs 775-810, keeping a stop loss below Rs 650.
The stock is facing resistance at the confluence of multiple Fibonacci retracement levels which suggests that the bull run may soon come to halt. Further, it has formed a bearish AB=CD pattern which confirms that the uptrend may stall and bears may take control.
On the daily time frame, it has also formed a bearish harmonic pattern which can lead to profit booking. Moreover, RSI has also made negative divergences on multiple time frames indicating weakening uptrend.
The stock may be sold in the range of Rs 1,740-1,730 for targets of Rs 1,550-1,470, keeping a stop loss below Rs 1,800.
The author is Senior Technical Analyst – Institutional Equities at YES Securities
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