Technical Analysis

Weekly trading guide: RIL is range-bound, with negative bias

Yoganand D | Updated on November 29, 2020

SBI

 

The stock of SBI has been on a medium-term uptrend since it took support at ₹175 in September this year. While trending up, the stock surpassed a key resistance at ₹225 in early November. Short-term trend is also up. The stock trades well above the 21- and 50-day moving averages. After encountering resistance at ₹250 recently, the stock was range-bound testing this significant long-term barrier. An emphatic break above this resistance can push it northwards to ₹262 and then to ₹270 in the short to medium term. Conversely, a decline below the support level of ₹234 can pull the stock down to ₹230 initially and then to ₹225. Next supports below ₹225 are placed at ₹220 and ₹214.5. A strong decline below the key base level of ₹225 will start weakening the uptrend and drag the stock down to ₹214 and then to ₹209. As the stock is range-bound between ₹234 and ₹250 trader should tread with caution.

ITC

 

Last week, the stock of ITC marginally extended the rally by climbing 1.1 per cent. However, it faces a vital medium-term hurdle at ₹200. Key resistance in the band between ₹200-208 had limited the upside in July and September. Therefore, traders should stay watchful as the stock approaches the key resistance band. Moreover, the daily relative strength index is displaying a negative divergence, indicating that near-term trend reversal is likely. A slip below the immediate base of ₹188 can drag the stock down to ₹184 where the 200-day moving average coincides, and then to ₹180 levels over the short term. But a decisive break above the crucial resistance level of ₹200 can take the stock higher to ₹210. A further rally beyond ₹210 can accelerate it to the subsequent resistance at ₹220. Traders with a short-term view should remain cautious and consider initiating fresh short positions on a fall below ₹188 with a fixed stop-loss.

Infosys

 

The stock of Infosys was choppy in the past week and closed the week on a flat note. Since mid-October, the stock has been on a sideways movement largely in the band between ₹1,060 and ₹1,160. Within this band, the stock now tests support at ₹1,100 with a negative bias. Both the daily and the weekly relative strength indices are charting downwards. A conclusive fall below the current support level of ₹1,100 can pull the stock down to ₹1,060 initially and a further decline can drag it to ₹1,000 over the short to medium term horizon. A conclusive slump below the psychological support level of ₹1,000 will start weakening the uptrend. Traders can initiate fresh short positions on a fall below ₹1,100 with a stop-loss at ₹1,125. But, a strong rally above the immediate resistances at ₹1,140 and ₹1,160 can take the stock northwards to ₹1,200 in the short term. Next key resistance above this level is at ₹1,230 and ₹1,250.

RIL

 

Following a recent fall below the significant support level of ₹2000, the stock of RIL had failed to move above this level in the past week. It traded in the narrow range of ₹1,900 and ₹2,000 over the past one week. Short-term trend has been down since recording a 52-week high at ₹2,368 in mid-September. The stock trades well below the 21- and 50-day moving averages. The daily relative strength index is on the brink of entering the bearish zone from the neutral region. A slip below the immediate support level of ₹1,900 will reinforce the downtrend and drag the stock down to ₹1,850 initially and then to ₹1,800. In that case, traders can go short below ₹1,900 with a fixed stop-loss. Key supports below ₹1,800 are placed at ₹1,700 and ₹1,600. On the upside, a rally above ₹2,000 can lead to a corrective rally to ₹2,100 levels. As long as the stock trades below ₹2,150 the short term downtrend will remain intact.

Tata Steel

 

In the past week, the stock of Tata Steel accelerated the short-term uptrend by gaining 8.5 per cent with good volume and has emphatically breached a key resistance at ₹550. The stock has appreciated 40 per cent so far this month. Following this sharp rally, the daily as well as the weekly relative strength indices are featuring in the overbought territory, implying a near-term corrective decline is on the cards. The stock has key resistance at ₹600 that could limit the upside. So, traders can consider booking partial profits and stay on side-lines for a while. A fall below ₹550 can pull the stock down to ₹520 and then to ₹500 in coming weeks. The short-term uptrend will remain as long as the stock trades above ₹480. Key support below ₹480 is at ₹440. Continuation of the up-move can test resistance at ₹600. A breakthrough of this can push it higher to ₹620 and ₹630 levels.

Follow us on Telegram, Facebook, Twitter, Instagram, YouTube and Linkedin. You can also download our Android App or IOS App.

Published on November 29, 2020
This article is closed for comments.
Please Email the Editor