Clever to face strong resistance near 16300; buy these two stocks for gains

By Rohan Patil

Nifty 50 traded in a step formation last week, where it continually witnessed a lower close and traded below its 50-day exponential moving average on the daily timeframe. Just like on the previous four occasions, prices partially or fully retraced their gap and then started their downward trend lower on the daily time frame. The index has formed a small ascending channel on the daily chart and prices are currently trading near the lower band of the pattern which is placed at the 15950-15900 levels.

Last week, the benchmark formed a bearish harami candle pattern on the weekly chart. And the close below the bearish pattern in the coming weeks will be an added advantage for the pattern. The momentum oscillator RSI (14) on the daily chart has formed a double top formation near 60 levels and is currently hanging around near 50 levels.

Nifty faced strong resistance near the 16300 levels and took profit near prior trendline resistance. In the event that prices break above the 16300 levels, strong momentum can be seen in prices towards the 16500 levels. Immediate support for the Nifty is placed near 15800 and below 15550 will act as major support for the Nifty.

Bank Nifty support at 34300

The Bank Nifty, after forming a bearish ABCD harmonic pattern over the previous week, prices traded in a bearish tone for the entire week and closed below its 100-day exponential moving average on the daily scale . The upward gap that formed on July 7th has partially closed on the daily chart.

Last week, the Banking Index formed a bearish harami candlestick pattern on the weekly chart. And the close below the bearish pattern in the coming weeks will be an added advantage for the pattern. The inside bar on the weekly chart suggests a decrease in volatility. Prices have taken resistance near the descending trendline which forms near the 35400 levels on the weekly chart.

The Bank Nifty was unable to clear its previous mid high of 36083 levels and the momentum oscillator RSI (14) on the daily chart formed a double top formation near 65 levels and is currently hanging on at almost 50 levels.

Bank Nifty faced strong resistance near the 35300 levels and took a profit near prior trendline resistance. If prices break above the 35300 levels, strong momentum can be seen in prices towards the 36500 levels. Immediate support for Bank Nifty is placed near 34300 and below 33800 will act as major support for Bank Nifty.

INDUS TOWER: BUY
Objective: Rs 243 | Stop Loss: Rs 219
Return 06%

Prices consolidated in the 205-220 levels for over three months and formed an accumulation pattern near the lower levels. INDUS TOWER on the daily chart gave an inverse head and shoulders on the daily chart above 220 levels on July 12th. Prices after the breakout have consolidated for two days and gains are resuming their uptrend.

Stocks are trading above their 21-, 50-, and 100-day exponential moving averages on the daily time frame, which is positive for prices in the short to medium term. The RSI momentum oscillator (14) on the daily chart reads in a higher low formation and closed above 65 levels with a positive crossover.

MINDA CORPORATION: BUY
Objective: Rs 248.50 | Stop Loss: Rs 220
Return 07%

On a weekly timeframe, Minda Corporation showed a strong upward bounce in June 2022 by forming a Hammer candle, which took trendline support. The trendline has been respected since November 2020. Price for the previous week held above the 20-week simple moving average (SMA), which has always acted as price support.

Around the Rs 180 level, one can spot a change in polarity by the prices. We can spot prices that have broken through the very earlier swing high of Rs 218 (May 2022) to Rs 163.5 (June 2022), which may undo the lower and lower formation pattern.

On the daily timeframe, we saw that prices broke through the hurdle of Rs 206.55 (May 18, 2022) this week, which led to the failure of the Head and Shoulder pattern.

(Rohan Patil is a technical analyst at Bonanza Portfolio. Opinions expressed are those of the author. Please consult your financial advisor before investing.)

Garland K. Long