“50% Fibonacci retracement level of the entire downfall from Nifty all time high to its recent low around 9950 levels is placed around 10,570. Negative divergence in hourly RSI is a concern.” says Jaydeb Dey, Technical Analyst at Stewart & Mackertich Wealth Management Ltd.
Jaydeb Dey
The Nifty yesterday ended 0.19 percent up at 10,548.70. Positive opening followed by consolidation above 10,500 mark led to end the session with a Hanging Man candle on daily chart.
Crucial thing is, session end recovery from day’s low remained short of 10,570, day’s high was 10,560.45. This critical resistance of 10,570, 50 percent Fibonacci retracement level of the entire downfall from Nifty all time high to its recent low around 9950 levels, has to be taken out on the up-side towards unfolding next leg of up-move.
Downside supports are placed around 10,510 and 10,460. Hence staying cautious on rise is advised. On a contrary note, breaking out 10,570 may unfold up-move towards 10,630.
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On the Nifty hourly chart; negative divergence in RSI is clearly visible now, which may restrict the upside till 10,570 levels. Traders may expect a quick retracement towards 10,460 as long as it trades below 10,570 levels.
Nifty patterns on multiple time frames show; it may face difficulty breakout critical resistance placed around 10,570. Hence, aggressive buying is not advised here on. Downside supports are placed are placed around 10,510 and 10,460.
The Bank Nifty previous day ended 0.05 percent up at 25,334.45. Ending the session with a Hanging man candle suggests, it may continue facing resistance around 25,400. Downside supports are placed around 25,250 and 25,150.
Based on thorough technical study, the house recommends Bank of India which can give up to 9% return in the near short term:
Bank of India | Rating: Sell | Target: Rs 102, stop loss: Rs 117 | Return: 9%
Its recent pullback failed to sustain above 30 daily EMA placed around Rs 112 levels. Ending the session with a bearish Doji candle for the third consecutive session below its 30 daily EMA implies the stock may again get into a corrective wave towards Rs 102 levels.
Based on above mentioned observations, the firm recommends Bank of India as a sell on rise for the short term downside target of Rs 102.
Disclaimer: The author is Technical Analyst at Stewart & Mackertich Wealth Management Ltd. The views and ideas expressed above may have been suggested to the clients of Stewart & Mackertich Wealth Management Ltd. It is advised that investors/traders should consult with their Certified Experts before taking any investment decision.