Technical Analysis

Weekly Trading Guide

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

Resistance caps the upside in SBI (₹251.2)

SBI failed to breach the key resistance level of ₹262 last week. The stock reversed sharply lower after making a high of ₹265.25 and closed 3.3 per cent down for the week. Immediate support is at ₹248. If SBI manages to sustain above this support, a bounce-back move to ₹262 is possible again.

 

 

 

A strong break above ₹262 will ease the downside pressure and take the stock higher to ₹270 initially. Further break above ₹270 will then increase the likelihood of the stock targeting ₹283 or ₹285. On the other hand, if SBI declines below the immediate support at ₹248 in the coming days, it can come under more pressure. Such a break can drag it to the crucial support level of ₹240. Whether SBI breaks below ₹240 or not will decide the next move. A bounce from ₹240 can keep it range-bound between ₹240 and ₹260 for some time. But a strong break and a decisive close below ₹240 can bring renewed pressure on the stock. Such a break will increase the likelihood of the stock tumbling towards ₹200 or ₹190 over the medium term.

ITC may remain range-bound (₹260.8)

ITC rallied as expected to test the resistance at ₹266. But it failed to sustain higher and came-off sharply from ₹268.2 and closed the week on a flat note. Inability to bounce from the current levels can keep the stock under pressure. Support is at ₹258. A break below it can drag the stock lower to ₹255 or even ₹250 in the short term. The region between ₹251 and ₹250 is a crucial support that has been limiting the downside since November. An upward reversal from this support region can take ITC higher to ₹260 and ₹265 again. In such a scenario, the stock can remain range-bound between ₹250 and ₹265 for some time. The stock will come under pressure only if it breaks below ₹250 decisively. Such a break can take the stock lower to ₹245 or ₹244 initially. Further break below ₹244 will increase the likelihood of the stock tumbling towards ₹235 or even lower. On the other hand, if ITC bounces from the immediate support at ₹258, it can move up to ₹265 or ₹267. Investors can hold the long positions and retain the stop-loss at ₹220

Infosys maintains its uptrend (₹1,169)

Infosys snapped its three-week fall as the psychological support at ₹1,100 held well. The stock made a low of ₹1,105 and surged to close the week 3.3 per cent higher. This upward reversal keeps the ₹1,100-₹1,200 sideways range intact. Infosys has been stuck in this range since February. As long as the stock remains above the ₹1,150-₹1,140 support zone, the possibility is high of it extending its upmove towards ₹1,200. Inability to break above ₹1,200 can drag Infosys lower to ₹1,150 or even lower. In such a scenario, the stock can remain range-bound for some time. But if Infosys manages to breach ₹1,200 decisively, it can gain fresh momentum. Such a break can take the stock higher to ₹1,250 or ₹1,270. It will also increase the possibility of the stock targeting ₹1,350 or even higher levels over the long term. The stock will come under pressure only if it breaks below the ₹1,100-₹1,090 support

Key resistance ahead for RIL (₹938.85)

RIL extended its rally for the second consecutive week. The stock surged 3.2 per cent in the past week. The near-term view remains positive. Support is in the ₹925-₹920 region. The stock can extend its current upmove and test the crucial resistance level of ₹960 in the coming days. Inability to break above ₹960 and a subsequent pull-back move will take the stock lower to ₹920. In such a scenario, the broader ₹870-₹960 sideways range will remain intact. RIL has been stuck in this range for a prolonged period of time. On the other hand, the stock will gain fresh momentum if it manages to breach ₹960 decisively. Such a break will increase the likelihood of the stock rallying towards ₹1,000 and ₹1,020 in the coming weeks. The outlook will turn negative only if the stock breaks below ₹870. But such a break look less probable at the moment. Traders who have taken long positions last week can hold it with a revised stop-loss at ₹920 and target of ₹955. Move the stop-loss further higher to ₹938 as soon as the stock moves up to ₹945.

Tata Steel lacks strength (₹593.3)

Tata Steel inched higher for the third consecutive week. The stock was up 1.5 per cent. Immediate support is at ₹588 — the 21-day moving average that is likely to be tested in the initial part of the week. An upward reversal from there will see the current rally extending towards ₹620 or even ₹630 in the coming weeks. Further break above ₹630 looks less likely now as fresh sellers may emerge at higher levels. A pull-back fromthe level of ₹630 can drag the stock to ₹600 or even lower levels thereafter. On the other hand, if Tata Steel declines below the 21-day moving average (₹588) support, it can fall to ₹570 or ₹560. Further break below ₹560 will then increase the likelihood of the stock falling towards ₹550 or ₹545. The region between ₹550 and ₹545 is a key medium-term support. A break below ₹545 can take the stock lower to ₹535 initially. Further break below ₹535 will then increase the possibility of the stock tumbling towards ₹510 or ₹500 over the medium term.

Published on April 15, 2018
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