The Nifty 50 Index ended the session in the red amidst sharp intraday volatility after six days of positive closing. Further, it has formed a Bearish Engulfing candlestick pattern at the top which indicates weakening uptrend and a possible start of a temporary downtrend; a corrective price action in the coming session would confirm the same.
Technical Indicator RSI too has turned south from an overbought territory on a shorter time frame chart suggesting a temporary pause or sideways actions in the coming trading sessions. Immediate support on the downside is at 18,350 which the bulls will try and protect. However, failure to do so, may trigger deeper corrections dragging the Index lower to cover up the recent GAP areas at 18,250-18,100.
On the flip side, if bulls manage to keep the Index above 18,350, then a short covering rally may play out taking the Index back to levels of 18,500-18,600.
Equity recommendations
| Buy at CMP of Rs 1427
Target: Rs 1,520
Stop Loss: Rs 1,360
The stock has broken out of a falling wedge pattern on higher volumes triggering resumption of the uptrend. Technical indicator RSI has turned upwards beyond 60 after forming a positive reversal suggesting strength in the stock.
Ambuja Cement Futures | Sell at CMP of Rs 390
Target: Rs 370
Stop Loss: Rs 400
The stock is down from the neckline of a Head & Shoulders pattern suggesting bearishness. Further, volumes were high in the selloff confirming weakness. RSI has also turned below the level of 40 suggesting lower levels in the coming sessions.
(The author, Aditya Agarwala, is Senior Technical Analyst, YES Securities. The views are his own)
