Technical Analysis

Weekly Trading Guide

Gurumurthy K | Updated on April 30, 2018 Published on April 29, 2018

SBI (242.6)

Support limits the downside in SBI

SBI fell as expected last week to test the crucial support level of ₹231. But contrary to our expectation of it breaking below ₹231, SBI reversed higher from this support. The stock made a low of ₹232 and reversed sharply higher on the final trading day, recovering all the loss made during the week. The downside pressure has eased after Friday’s recovery. Resistance is at ₹251, which is likely to be tested in the near term. Inability to breach this hurdle can drag the stock lower to ₹240 or even ₹231 again. But a strong break above ₹251 will increase the likelihood of the stock extending its up-move to ₹260 or even ₹265 in the short term. Broadly, SBI is likely to remain range-bound between ₹231 and ₹265 in the coming weeks. A breakout on either side of ₹231 or ₹265 will then decide the next trend. Traders who have taken short positions last week can hold it. Revise the stop-loss lower to ₹252 and move it further lower to ₹240 as soon as the stock dips to ₹238. Book profits at ₹234.

 

 

ITC (₹279.2)

Bullish outlook is intact for ITC

ITC was up 1.2 per cent last week. Indicators on the charts keep the bullish outlook intact. A flag formation is visible on the daily chart. This is a bullish continuation pattern that indicates that the up-move is likely to continue. Also, the 21-day moving average has crossed over the 55- and 100-day moving averages. This is another bullish signal that indicates that the downside could be limited. Support is at ₹277. A rally to ₹285 or ₹287 looks likely. Cluster of resistances are poised between ₹285 and ₹290. Whether ITC breaches this resistance zone or not will decide the next move. The bullish outlook will get negated only if ITC declines below ₹277. In such a scenario, a fall to ₹272 and ₹270 is possible. Investors can hold the long positions and retain the stop-loss at ₹220. Short-term traders can go long at current levels and on dips at ₹278. Stop-loss can be placed at ₹276 for the target of ₹285. Revise the stop-loss higher to ₹281 as soon as the stock moves up to ₹283 level.

 

Infosys (₹1,185.1)

Infosys hovers below key barrier

Infosys broke above the crucial level of ₹1,200 but failed to sustain the gains. The stock made a high of ₹1,212.4, but fell back sharply to make a low of ₹1,145.2. However, it managed to bounce back from this low and close 0.6 per cent higher for the week. A revisit of ₹1,200 is possible. But whether the stock manages to breach this hurdle or not will decide the next trend. A strong and decisive close above ₹1,202 will be a first confirmation sign of the stock breaking above ₹1,200. In such a scenario, the stock can gain momentum and rally to test the previous high of ₹1,278. It will also keep the overall uptrend intact with the potential to target ₹1,350 or even ₹1,400 over the medium term. On the other hand, if Infosys remains below ₹1,200, it can continue to remain range-bound between ₹1,100 and ₹1,200 for some more time. The bias, however, remains positive for the stock.

 

RIL (₹994.7)

A key resistance is ahead for RIL

RIL surged last week, breaking above the key resistance level of ₹960. The stock made a low of ₹926 early in the week but rallied all through thereafter. It made a high of ₹1,010.7, but declined slightly from there to close over 7 per cent for the week. The near-term view remains bullish. The current up-move can extend to test the next crucial resistance level of ₹1,025. Whether RIL breaks above ₹1,025 or not will decide the next move. A strong break above ₹1,025 will boost the momentum. Such a break will then increase the likelihood of the stock targeting ₹1,050 or even ₹1,100 . On the other hand, if RIL reverses lower from ₹1,025, it can fall to ₹960 in the short term. A break below ₹960 will see the down-move extending towards ₹900. But if RIL manages to bounce from the level of ₹960, it can go back to ₹1,000 and ₹1,025 levels once again. In such a scenario, the stock can remain range-bound between ₹960 and ₹1,025 for some time. Traders can stay out of this stock for some time.

 

 

Tata Steel (₹589.6)

Resistance may cap upside in Tata Steel

Tata Steel snapped its four-week rally last week. It tumbled about 5 per cent intra-week and made a low of ₹578 on Thursday. It, however, bounced from this low, recovering some of the loss and closed 2.8 per cent lower for the week. The long positions recommended last week have been stopped out. Key resistance is between ₹600 and ₹605. The downside pressure will ease if Tata Steel manages to breach ₹605. In such a scenario, a relief rally to ₹620 or even ₹630 is possible. On the other hand, the possibility is high of the stock falling to ₹560 and ₹550, while it remains below ₹605. A key long-term trendline support is poised around ₹545. A strong break below it will increase the likelihood of the stock tumbling towards ₹500 or even ₹480 . Short-term traders with high risk appetite can go short on rallies at ₹595 and ₹600. Stop-loss can be placed at ₹625 for the target of ₹555. Revise the stop-loss lower to ₹585 as soon as the stock moves down to ₹570.

 

 

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