This week, the Nifty has given a strong breakout and sustained above the 18,000 mark which shows strong positive market sentiment for the medium term. The price action maintained its higher top-higher bottom formation on all the timeframes like daily, weekly and monthly charts, signalling the possibility of a continuation of the uptrend in coming days.
However, the momentum indicator RSI or relative strength index is forming a series of negative divergence on daily as well as on weekly charts, indicating some caution at higher levels.
Looking at the chart, we believe the index is currently moving in a strong uptrend. We can expect the index to move higher towards 18,382 (38.2 percent extension level of 15,513 – 17,947 projected from 17,452) followed by 18,670 (50 percent extension level of 15,513 – 17,947 projected from 17,452) and eventually towards 18,957 (61.8 percent extension level of 15,513 – 17,947 projected from 17,452).
The stop loss level for the Nifty would be the 18,000 mark on closing basis.
Here are three technical buy calls for next two to three weeks:
ITC: Buy | LTP: Rs 256.55 | Stop Loss: Rs 230 | Target: Rs 310 | Return: 21 percent
ITC has given a triangle pattern breakout on the weekly charts with volume confirmation a few weeks ago that shows a strong bullish undertone for the stock in the medium to long term.
Looking at the price action, momentum indicators and other technical parameters, we believe this stock has a lot of upside potential left.
Going ahead, we expect the bullish momentum to accelerate if the price goes above the previous swing high of Rs 310. If this level is breached, we might see the stock move towards Rs 322 followed by Rs 367.
The stop loss for this trade setup would be Rs 230 levels on closing basis.
Tata Consumer Products: Buy | LTP: Rs 849.60 | Stop Loss: Rs 796 | Target: Rs 960 | Return: 13 percent
The stock had entered a corrective phase after hitting a lifetime high of Rs 889 and moved lower towards Rs 796, which coincides with the 20-week simple moving average and 23.6 percent retracement level of Rs 458 to Rs 889. For the past three weeks the prices have been finding support near the same and bounced back sharply.
If this level holds, we might see prices gain momentum and move higher toward the recent lifetime highs of Rs 889 and eventually towards Rs 960 (38.2 percent extension level of Rs 458 – Rs 889 projected from Rs 796).
Investors can accumulate Tata Consumer at this point and hold with a target of Rs 889 and Rs 960, and maintain a stop loss of Rs 796 on closing basis.
Federal Bank: Buy | LTP: Rs 93.10 | Stop Loss: Rs 85 | Target: Rs 110 | Return: 18 percent
Federal Bank has given a triangle pattern breakout with volume confirmation this week on the weekly charts which indicates strong positive sentiment for the medium to long term.
The momentum and technical indicators all point to the possibility of the prices moving higher towards the Rs 98.55 mark immediately. If level is breached, we might see the prices move towards the Rs 110 level eventually.
The stop loss for this trade setup would be Rs 85 levels on closing basis.
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