The way markets are placed, this week would be quite crucial and hence, one should keep a close eye on a few key levels.
Although the market has managed to recover well, it would be a daunting task surpassing the sturdy wall of 11,300-11,350. Till the time this range is not conquered successfully, we advocate some caution.
Let’s understand technically why this should be considered an important junction.
Firstly, the 78.6 percent retracement of the entire fall from 12,430.50 to 7,511.10 comes around it. Secondly, the 100 percent price extension of the first up-move (7,511.10 – 9,889.05) from 8,806.75 precisely coincides around 11,300-11,350.
We are standing at the pullback level of the ‘Parabolic SAR’ which has been following the entire uptrend and has finally given some signs of weakness (due to last Monday’s negative close) for the first time in the entire up-move.
Considering all these observations, we advise traders to stay light and should ideally take some money off the table.
On the downside, a move below 11,100 would lead to an immediate correction towards 10,950 – 10,880 levels.
Looking at the benchmark index, the week gone by might appear a boring week (especially the second half); but if we meticulously observe the price action in the broader markets, we would rate it as one of the finest weeks for individual stocks in the last few weeks.
Last Friday, the Nifty Midcaps 50 index posted a smart rally to surpass its recent hurdles. Hence, traders are advised to stay focused on individual stocks this week, but the aggressive positions should be avoided until the time important levels are not surpassed convincingly.
Here’s one buy and one sell call for the week:
This stock has been consolidating for the last one-and-a-half a month along with its peer counters.
However, last Friday, we witnessed stellar moves in this space. Berger and Asian Paints, both have identical chart structures, but looking at the placement of ‘RSI-Smoothened’, Berger Paints looks a notch better.
Price-wise, we can see a decisive breakout happening from the recent congestion zone along with sizable volumes, providing credence to the move.
Hence, we recommend going long on the stock on a decline towards Rs 545 for a target of Rs 580 over the next few days. The stop loss can be placed at Rs 525.
Most of the gold financing companies have been enjoying their dream run over the last three months and this stock has been the clear leader in this space.
In the last couple of weeks, the brakes seem to have applied to the strong optimism. In fact, last Thursday after the RBI monetary policy, the stock tumbled from higher levels and in the process, went on to breach its 20-day EMA on a closing basis for the first time in recent months.
Although we witnessed minor pullback on the following day, the short-term chart structure looks weak.
Hence, one can look to go short on the stock for an extended profit-booking towards Rs 1,140 and the stop loss can be placed at Rs 1,265.
(The author is Chief Technical & Derivatives Analyst at Angel Broking)
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