Technical Analysis

Weekly Trading Guide

Akhil Nallamuthu | Updated on October 06, 2019

SBI in a strong bear grip (₹249.9)

The stock posted some recovery in the month of September by appreciating to ₹315 levels. However, the rally did not sustain, and the stock fell sharply from that level. During the past week, the price even slumped below a critical support at ₹267 and closed at ₹249.9, indicating that the next leg of trend is on the downside. The stock has been continuously falling and has registered back-to-back weekly loss. The daily relative strength index is below the mid-point level of 50 and the moving average convergence divergence indicator has entered the negative territory, meaning there might be more selling pressure. An immediate support is at ₹246. Below that, the sell-off could intensify, potentially dragging the price to the support band between ₹230 and ₹233. On the upside, the stock will face resistance at ₹260. If the stock manages to get past that level, it might move towards ₹267. Considering the scenario, traders can sell the stock on rallies with a stop-loss above ₹267. The stock posted a weekly loss of 11 per cent.



ITC holds on to its gain (₹257.2)

There was not much volatility in the ITC stock last week. The stock briefly traded beyond the ₹247-260 range, but eventually moved back into the range after facing a hurdle at ₹263 — 38.2 per cent Fibonacci retracement level of the previous bear trend. The stock has closed in the green for the second week in a row, though the gain was marginal. It should also be noted that the stock continues to trade above both the 21- and 50-day moving averages, implying a bullish bias. The daily relative strength index is above the mid-point level of 50 and the moving average convergence indicator looks steady in favour of the bulls. The stock seems to be trading with a bullish bias. However, the price might soften further before breaking on the upside. Hence, one can initiate long positions either at ₹250 levels or beyond ₹260 with a stop-loss below the lower boundary of the range at ₹247. Look for target between ₹270 and ₹273, which is a considerable resistance zone. The stock posted a weekly gain of 1.7 per cent.



Infosys moves in sideways range (₹793.4)

The price action of Infosys stock is sluggish and seems to be trading sideways. The stock attempted to break above the critical resistance at ₹800 but failed . Noticeably, the price has been oscillating between ₹781 and ₹800 for the past seven trading sessions. Also, it could not move past the dynamic 50-day moving average resistance which is currently coinciding with the resistance at ₹800, making it more significant. Unless the stock invalidates the sideways trend, the next leg of the trend will be unclear. The moving average convergence divergence indicator is showing signs of weakness, but the relative strength index seems to be recovering. However, only a breakout beyond ₹800 will take the stock price higher. If it gets past ₹800, it will face a minor resistance at ₹814. Above that, the price could rally towards ₹850 . Alternatively, if stock price dips below ₹781, it will decline further to ₹762. A break below ₹762 will intensify sell-off and the stock price could dwindle to ₹740 level. The stock posted a weekly gain of 1.4 per cent.



Reliance above key support (₹1,308.1)

The share price of Reliance Industries did not change much compared to the previous week and witnessed low volatility. The opening price and closing price were at the same level, meaning a doji candlestick in the weekly chart. It denotes a temporary indecisiveness on the direction of the trend during the past week. However, the bullish trend in the stock looks solid and as long as it trades above the key support at ₹1,300, the chances for price moving northwards is high. There is no weakness observed in the relative strength index and the moving average convergence divergence indicator seems to be steady. Hence, any correction in price can be used as an opportunity to initiate long positions. It is likely to move up to ₹1,365 and ₹1,400 levels, testing the life-time high of the stock. Stop-loss can be set below the immediate support at ₹1,300, because if the stock undergoes a correction, that level will perhaps arrest the decline. Below that level, subsequent support can be seen at ₹1,240.



Tata Steel poised to decline further (₹333.1)

Tata Steel witnessed selling pressure last week and the price broke below the lower boundary of the ₹345-380 range that had been holding the stock for the past three weeks. The break down opens the door for further weakness in the stock. It has pierced below the 21-day moving average as well. The daily relative strength index stays below the mid-point level of 50, where the moving average convergence divergence indicator is in the negative territory. All this could indicate that the stock might attract more selling pressure in upcoming trading sessions. Even though the stock currently hovers around a support at ₹330, traders with short-term and medium-term perspective can sell it on rallies. Below that level, the price will most probably depreciate to the psychological level of ₹300 in the short term. The support comes in at ₹280 levels. However, if the stock moves up from the current levels, rallies could be capped between ₹345 and ₹360. It posted a weekly loss of 7.3 per cent.


Published on October 06, 2019

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