A momentum oscillator RSI and indicator Stochastic have reversed from overbought territory, which suggests bearish to sideways sentiments for the coming days, says Rohan Patil of Bonanza Portfolio
RohanPatil
January 20, 2022 / 07:32 AM IST
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Rohan Patil, Technical Analyst, Bonanza Portfolio
Two back-to-back red candles on the daily chart of the benchmark index indicate a heavy profit-booking scenario after a rally of almost 2,000 points in the index.
The Nifty50 formed a Bearish Engulfing candlestick pattern on January 18 and gave a pattern confirmation by closing below the low of the bearish candle on its next immediate trading session.
In the last couple of trading sessions, both FIIs and DIIs are the net sellers in the market indicating a bear grip in further trading sessions. The index has also formed a bearish alternate shark harmonic pattern on the daily chart and prices have closed below its PRZ (potential reversal zone) levels.
The Nifty50 on the weekly chart has given a bullish pole flag pattern breakout and the throwback of the pattern was awaited. The current fall can be considered as a throwback of the broader pattern which is likely to find support near the upper band of the flag pattern which is placed near 17,500 levels.
A momentum oscillator RSI (relative strength index) & indicator Stochastic has reversed from overbought territory, which suggests bearish to sideways sentiments for the coming days. The indicators on the intraday chart are currently oversold and a sharp bounce back for a limited period cannot be ruled out.
The support for the benchmark index stands at 17,800 and 17,600 which is supported with 21 and 50-day exponential moving averages and the resistance for the index is capped at 18,300 levels.
Here are two technical buy calls for next 2-3 weeks:
Polycab India: Buy | LTP: Rs 2,654.60 | Stop-Loss: Rs 2,550 | Target: Rs 2,850 | Return: 7.40 percent
The prices were trading in a rectangle formation for the past four months and have formed a trend line resistance at Rs 2,600 levels.
Polycab has broken out of a rectangle pattern at Rs 2,685 levels on January 14 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 Rs 2,600 levels.
The stock is trading above its 21, 50 and 100-day exponential moving averages on the daily time frame, which is positive for the prices in the near term.
The MACD (moving average convergence divergence) indicator is reading above its centerline with a positive crossover above its signal line. Momentum oscillator RSI (14) is reading near 60 levels which indicates positive momentum will like to continue ahead.
Snowman Logistics: Buy | LTP: Rs 44.95 | Stop-Loss: Rs 42.75 | Target: Rs 49.50 | Return: 10 percent
The prices were trading in an inverted head and shoulder formation for the past three months and have formed a neck line resistance at Rs 44 levels.
Snowman has broken out of an inverted head and shoulder pattern and the prices have registered a decisive breakout that suggests a change in the trend from sideways to upside. From the last three to four trading sessions we have observed an above average volume activity in the counter, which also suggests price volume breakout on the daily time frame.
Stock is trading above its 21, 50 and 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 60 levels which indicates positive momentum will like to continue ahead.
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