Nifty seems to be feeling fatigued as it approaches the 16,000 mark and might witness a slight correction. The 15,670 levels in the coming sessions will act as a make-or-break level, said Karan Pai of GEPL Capital
Karan Pai
July 02, 2021 / 07:37 AM IST
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Nifty50 has been forming a higher high, and higher low pattern on the monthly time frame that indicates the trend of the benchmark index from a long-term perspective remains strongly bullish.
Coming down to the weekly chart, we can see that the prices have been facing rejection near the 16,000 mark for about 4 weeks.
From a price action point of view, the index has been witnessing fatigue on the shorter time frame, and on the daily chart, we can see a range-bound movement for the past 7 sessions between 15,915 and 15,673.
On the options front (July 8, 2021 expiry), the highest open interest is seen in the 16,000 Call options, and on the put side, the highest open interest is seen in the 15,400 contracts.
Thus, we can expect the broader range of the index to be 16,000-15,400.
On the indicator front, the stochastic plotted on the weekly and the daily time frame can be seen forming a bearish crossover near the overbought level that indicates the bulls might be losing their hold on the trend.
Going ahead, the key support level to watch out for is 15,670 on the downside, and if the index breaches below this level then we can expect further downside towards the 15,450 mark (3-week low), and 15,100 (multiple touchpoint level and the 20 weeks SMA).
To sum it all up, the Nifty seems to be feeling fatigued as it approaches the 16,000 mark and might witness a slight correction. The 15,670 levels in the coming sessions will act as a make-or-break level if the prices breach below this level we can expect the prices to move lower and test the 15,450 and 15,100 eventually.
Our bearish view will be negated if the 15,915 mark is breached on the upside, and in that case, we can expect the index to move higher and test the 16,000-16,100 mark.
Here is a list of top trading ideas for the next 3-4 weeks. Returns are calculated based on the closing price of 30th June:
Cummins India: Buy| LTP: 899| Target: Rs 1061-1147| Stop Loss: Rs 867| Upside 18%
Cummins India on the monthly time frame can be seen forming a higher high, higher low pattern since March 2020.
On the weekly chart, we can see that the stock has been forming an accumulation formation for about 12 weeks after testing the high of Rs 934.
In this week, the stock opened above the 8-week high and moved higher. On 30th June 2021, the prices gained momentum and rallied towards the Rs 907 (28th April 2021 high).
This up move was also backed by strong volume buildup, indicating participation in the up move. On the indicator front, the RSI plotted on both the weekly and the daily time frame can be seen placed above the 50 mark and moving higher, indicating the presence of bullish momentum in the prices.
Going ahead, Rs 937-941 (previous swing high and 38.2% extension level of the rise from 425– 937 projected from 747) will act as an immediate resistance level, and if the prices manage to break above this level then we might see the prices move higher and test Rs 1,061 (61.8% extension level of the rise from 425– 937 projected from 747) and eventually towards the Rs 1,147 (78.6% extension level of the rise from 425– 937 projected from 747).
The key level to watch for on the downside is Rs 867 (the breakout level) if the prices breach below this level, we can assume the prices to move lower towards Rs 816 (multiple touchpoint level).
Cummins India on the medium-term charts seems to be breaking out from a consolidation pattern, and this breakout was backed by above-average volumes, indicating participation in the breakout.
Tata Elxsi: BUY| LTP: Rs 4296| Target: Rs 4939| Stop Loss: Rs 3981| Upside 15%
Tata Elxsi on the monthly time frame can be seen forming a higher high, higher low pattern since March 2020.
On the weekly chart, we can see that the stock had been in a range of about 7 weeks after testing a high of Rs 4,090.
On 30th June, the stock not only broke but also closed above the previous swing high of Rs 3,981, this breakout was backed by above-average volume, indicating participation as the prices test fresh lifetime high.
On the indicator front, the RSI plotted on the weekly chart seems to be witnessing a range shift since May 2020 and has managed to remain above the 50-mark ever since, currently it seems to be forming a bullish hinge and moving higher towards the overbought level, indicating that the bulls are in control of the trend.
Going ahead, the Rs 4607 (78.6% extension level of the rise from 2540-4090 projected from 3390) will act as an immediate resistance level, and if prices manage to break above this level then we might see the prices move higher and test the Rs 4,939 (100% extension level of the rise from 2540-4090 projected from 3390).The key level to watch for on the downside is 3,981 (Previous swing high) if the prices breach below this level, we can assume the prices to move lower towards Rs 3,724 (Multiple touchpoint level).
IGL: Buy| LTP: Rs 557| Target: Rs 595-622| Stop Loss: Rs 530| Upside 11%
IGL has been forming a higher high, higher low pattern since October 2020.
On the weekly time frame, we can see that the prices were in consolidation for about 3 months after testing the high of Rs 594.85.
On 30th June 2021, the prices gained momentum and managed to break and close above the 3-month consolidation, this up move was backed by the highest volume since 19th Feb 2021, indicating participation as the prices break above the consolidation.
On the indicator front, the RSI plotted on the weekly time frame seems to have witnessed a range shift on 2nd November 2020 and has managed to remain above the 50 mark ever since.
Currently, it can be seen forming a bullish hinge near the 50 mark and moving higher, indicating increasing bullish momentum in the trend.
Going ahead, Rs 595 (50% extension level of the rise from 364-595 projected from 480 and the previous swing high) will act as a resistance level, if the prices sustain above this level, we can see the prices move higher and test the Rs 622 (50% extension level of the rise from 364-595 projected from 480).
The key level to watch for on the downside are Rs 530 (Multiple touchpoint level) followed by Rs 500 (Multiple touchpoint level).
(The author is a Technical Analyst, GEPL Capital)
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