Technical Analysis

Weekly Trading Guide

Gurumurthy K | Updated on July 15, 2018 Published on July 15, 2018

SBI (₹257.6)

SBI continued to trade in a sideways range and closed on a mixed note last week. A range-bound move between the support at ₹255 and resistance at ₹266 is possible for some time. A breakout on either side of ₹255 or ₹266 will then decide the next trend. If SBI manages to surpass ₹266 decisively, it can move up to ₹270 and ₹272. The region between ₹270 and ₹272 is a key resistance, and a strong break above ₹272 is needed to turn the outlook positive. Such a break can take SBI higher to ₹280 and ₹285. But the strong break and a rally above ₹272 looks less probable at the moment. But if SBI declines below ₹255, it can dip to ₹253 or ₹249. A break below ₹249 can drag the stock lower to ₹243 or even ₹240. Traders with a high-risk appetite and a short-term perspective can go short on rallies at ₹264 and ₹267. Stop-loss can be placed at ₹274 for the target of ₹245. Revise the stop-loss lower to ₹262 as soon as the stock moves down to ₹259.

ITC (₹270.4)

ITC rose, breaking above the key resistance levels of ₹274 and ₹277, but failed to sustain higher. The stock made a high of ₹279.9 and tumbled over 3 per cent from this high. Support is in the ₹267-266 region, which is likely to be tested in the near term. But a break below ₹266 is less probable as the bias remains positive. The 21-day moving average has crossed over the 200-day moving average. This is a bullish signal, indicating that the downside could be limited in the stock. An upward reversal from the ₹266-267 support zone can take ITC higher to ₹272. A break above ₹272 can take the stock higher to ₹274 and ₹277. Inability to break above ₹277 can trigger a down-move again to ₹270 levels. The stock can thus remain range-bound between ₹266 and ₹277. An eventual break above ₹277 will boost the momentum. This will increase the possibility of the stock rallying to ₹285 and ₹289. Investors can hold the long positions and retain the stop-loss at ₹220.

Infosys (₹1,309.1)

Infosys managed to bounce and close about 2 per cent higher last week. However, the price action on the chart indicates that the stock lacks fresh buyers to decisively retain it above the psychological level of ₹1,300. This keeps the possibility high of the stock breaking below the key 21-day moving average support level of ₹1,289. The 21-day moving average has been providing strong support for the past two months. A break below this level will turn the near-term outlook negative and can drag Infosys lower to ₹1,250 or ₹1,235 on the back of profit-booking. Support is at around ₹1,200. A fall below this support is unlikely now, as fresh buyers are likely to emerge at lower levels and limit the downside. The level of ₹1,350 is a key resistance. The stock has to surpass this level to bring back the bullish momentum. Such a break will then pave way for the long-term target level of ₹1,450 and ₹1,470. The medium- and long-term investors can hold the long positions.

RIL (₹1,096.7)

RIL surged, breaking above the crucial resistance levels of ₹1,000 and ₹1,050 in the past week. The stock was up, a whopping 12.3 per cent. The strong rally has finally ended the prolonged sideways consolidation movement in the stock. RIL has been stuck inbetween ₹850 and ₹1,020 since last November. An up-move to test the ₹1,135-₹1,150 resistance zone is possible in the coming days. Inability to breach ₹1,150 can trigger an intermediate pull-back move to ₹1,050 or ₹1,030. The region between ₹1,030 and ₹1,050 will now serve as a strong support for the stock and can limit the downside. Dips to this support zone are likely to find fresh buyers. An eventual break above ₹1,150 can take the stock to ₹1,200 or higher. Short-term traders can make use of dips to go long at ₹1,060 and accumulate at ₹1,050 and ₹1,040. Stop-loss can be placed at ₹1,010 for the target of ₹1,150. Revise the stop-loss higher to ₹1,080 when the stock moves to ₹1,110.

Tata Steel (₹558.1)

Tata Steel was stuck in a narrow range between ₹553 and ₹581 in the past week. The immediate outlook is unclear for the stock. If it breaks below ₹550, the stock can dip to test the crucial support level of ₹540 in the coming days. A bounce from ₹540 can take the stock higher to ₹560 and ₹570. As long as it remains above ₹540, a broad sideways move between ₹540 and ₹600 is possible for some time. A breakout on either side of ₹540 or ₹600 will then decide the next trend. A strong break above ₹600 will ease the downside pressure and take the stock higher to ₹630. Such a rally will ease the threat of the stock declining below the crucial support level of ₹540. On the other hand, if Tata Steel declines below ₹540, it can dip to ₹529. The downside pressure will increase if the stock declines below ₹529. A break below ₹529 will increase the likelihood of the stock tumbling towards ₹480 or ₹475 over the medium term.

 

Published on July 15, 2018
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