Technical Analysis

Weekly Trading Guide

Akhil Nallamuthu | Updated on September 21, 2019

SBI (₹301.7)

SBI began the week marginally lower at ₹288.2 compared with the previous week close of ₹291.7. The stock declined further to ₹273 levels during the earlier part of the week. However, on Friday, it surged with huge volumes and closed the day with 10 per cent gain. It also moved past resistances at ₹292 and ₹300, closing the week at ₹301.7, posting a considerable weekly gain of 3.4 per cent. Before moderating to ₹301.7, the stock registered a high of ₹307.65, where the 50-day moving average lies. There’s a resistance in the band between ₹305.1 — the 38.2 per cent Fibonacci retracement level — and ₹307.65. With the daily relative strength index and moving average convergence divergence indicator pointing upwards and the stock breaking above ₹300, the current rally may continue to push the stock price up to ₹318 and then to ₹320 levels. Alternatively, if the stock slides down after testing the resistance band between ₹307.65 and ₹305.1, it might decline to ₹292 levels.

ITC (₹238.05)

ITC, the stock price of which has been trading in a range between ₹240 and ₹247, declined below the lower limit on Tuesday. The stock retested a support at ₹234.65, from where the price attempted to recover twice in the past one month. However, on both occasions, the recovery was blocked by resistance at ₹247. As a result, the stock seems to have formed a broader range between ₹234.65 and ₹247. Even on Friday, after appreciating to the resistance at ₹247, the stock could not hold on and gave up most of its gains towards the end of the session. The scrip closed the week at ₹238.05. Hence, for the stock to start trending, it must either decisively break above ₹247 or below ₹234.6. In case the stock attracts buying interest and moves past the resistance at ₹247, it may appreciate towards the resistance band between ₹250 and ₹252. But if the stock slips below ₹234, the sell-off could intensify and the price might tumble to ₹224 levels.

Infosys (₹805)

The stock of Infosys was consolidating for the week after a mute opening on Monday. But on Friday, the stock price of the IT major slumped and it lost 1.9 per cent during the session. It closed below 21-day moving average, indicating a potential reversal in short-term trend. With a close at ₹805, the stock has also breached a support at ₹814, where the 38.2 per cent of Fibonacci retracement level of the previous bullish swing coincides. Currently, the fall is arrested by a support in the band between ₹800 and ₹804. The relative strength index has crossed below the mid-point of 50 and the moving average convergence divergence too shows weakness, indicating further depreciation. Hence, if the price breaks below ₹800, it could fall to the support at ₹793, where the important 61.8 Fibonacci retracement level coincides. The 50-day moving average is at ₹792, making that price area a significant support. But if the price recovers from the current level, it may rally to ₹814.

RIL (₹1254.35)

The stock price of Reliance Industries was trading without showing any trend till Thursday. However, on Friday, after making an intra-day low of ₹1,174.3, the stock price rose rapidly and closed at ₹1254.35. Intra-day gain of the stock stood at 6.4 per cent. It registered an intra-day high of ₹1,269.9, which is also the month-to-date high. That way, it has breached a considerable resistance at ₹1,240. The stock has also zoomed past both the 21- and 50-day moving averages. Hence, the prevailing positive sentiment opens the door for the stock to appreciate towards ₹1,300, which is a key level from a medium-term perspective. This is because beyond ₹1,300, the stock has the potential to turn the medium-term trend bullish. Alternatively, in a less likely scenario where the stock moderates from the current levels, the price band between ₹1,230 and ₹1,240 will act as a solid support, limiting the correction. The probability of the price declining below these levels is low.

Tata Steel (₹368.55)

The share price of Tata Steel looked unsteady as it began the week at ₹362 and slid to ₹342 levels, moving below the support at ₹350. On Friday though, on the back of broad-based buying, the stock price went up, reclaiming the previous week high of ₹379.5. Interestingly, the stock faced selling pressure towards the close of Friday’s session, giving up some of its gains and wrapped up for the week at ₹368.5. Comparing this with ₹367.3 — the previous week closing price — there is essentially not much change. Hence, it is reiterated that a close above ₹380 is a prerequisite for the stock to move to higher levels. Noticeably, both the relative strength index and the moving average convergence divergence indicator point upwards, indicating a build-up in positive sentiment. In such a case, the stock may appreciate to ₹395, beyond which it will face a hurdle at ₹400. But, if the stock is sold off from the current levels, it may decline to ₹350.


Published on September 21, 2019

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