Bank Nifty after forming a bearish engulfing candlestick pattern on September 28 witnessed a steep fall of about 1400 points from its all-time high levels.(Image: REUTERS)
By Rohan Patil
Nifty 50 was trading in a rising channel formation since July 28 and registered its lifetime high of 17947.65 on September 24 giving a return of 15% in just three months. The Benchmark index on September 30 has broken the lower band of the rising channel pattern and has witnessed a breakdown of a rising channel pattern on the daily time frame.
Prices have breached their upward rising trend line but have taken strong support at the 21-day exponential moving average and acted as an anchor point for the index. Prices started with a negative note for the October month expiry and closed below its important support levels of 17600 levels.
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On the weekly chart, prices have formed a bearish dark cloud cover candlestick pattern and prices have slipped almost two per cent from its previous week’s closing. On the indicator front, daily RSI is at 58 and has shown a bearish divergence with negative crossover, where the price had made higher highs but RSI made a lower high. For September month we saw an outperformance from the Nifty Media & Nifty Realty index with a gain of more than 30% on the monthly closing basis.
As of now, there is no indication of Nifty sliding below the 17200 – 17000 levels, but you never know how global development pan out. The resistance is pegged at 18000 levels.
Bank Nifty to face resistance at 38000
Bank Nifty after forming a bearish engulfing candlestick pattern on September 28 witnessed a steep fall of about 1400 points from its all-time high levels.
The banking index was trading in a rising channel pattern for the past one month with a higher high higher bottom formation on the daily interval. Prices have opened near the lower band of the pattern on October 1 but were able to recover from the lower levels and hence prices were able to close just near the lower band of the pattern.
On the weekly chart banking index has also formed a bearish engulfing candlestick pattern and it will be important to watch if prices give a bearish confirmation in the this trading week.
Momentum oscillator RSI (14) has just closed near 50 levels with negative crossover after registering a negative divergence on the daily interval. The MACD indicator has also given an early indication of a trend reversal by closing below its signal line.
Currently, the Banking index is trading above its Parabolic SAR indicator on the weekly chart which is placed near 36500 levels. Major resistance is placed near 38000 levels & on the downside; if prices break below 36500 then we may test 35800 levels.
SUN Pharma: BUY
CMP: Rs 826 | Target: Rs 884 | Stop Loss: Rs 790
Return: 7%
The prices were trading in a rectangle formation since past two months and have formed a trend line resistance at 797 levels. SUNPHARMA has broken out of a rectangle pattern at 805 levels on 29th Sept and the prices have registered a decisive breakout that suggests a change in the trend from sideways to upside.
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 above 60 levels which indicates positive momentum will like to continue ahead.
CRAFTSMEN: BUY
CMP: Rs 2106 | Target: Rs 2250 | Stop Loss: Rs 2021
Return 7%
CRAFTSMEN has given a spectacular rally from the low of 1648 on 21st June 21, to an all-time high of 2173 on 12th July 2021, and post that rally prices went in a sideways consolidation for more than two months and traded in a range between 1800 to 2000 levels.
CRAFTSMEN has formed a rectangle pattern formation within that two months period and finally broken out of a rectangle pattern at 2140.40 levels on 23rd Sept and the prices have registered a decisive breakout that suggests a change in the trend from sideways to upside.
Stock is trading above its 21, 50 & 100- day exponential moving averages on a daily time frame, which is positive for the prices in the near term.
When we observe volume activity there has been above-average volume set up from the past couple of weeks on the daily chart, which indicates accumulation phrase. Momentum oscillator RSI (14) is reading above 60 levels with positive crossover on the daily scale.
(Rohan Patil is a technical Analyst at Bonanza Portfolio, Views expressed are the author’s own. Please consult your financial advisor before investing.)
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