Technical Analysis

Weekly Trading Guide

| Updated on November 11, 2018 Published on November 11, 2018

SBI (₹283)

SBI began the week on a positive note but failed to sustain the momentum. The stock had reversed sharply lower from the high of ₹299.9. However, key supports are poised near current levels in the ₹281-280 region and then in the ₹278-276 zone. Though a test of these supports is possible, a strong break below ₹276 looks less likely. The 21-day moving average is on the verge of crossing over the 200-day moving average. This is a bullish signal, indicating that that the downside could be limited. As such, an eventual upward reversal either from the ₹281-280 or ₹278-276 support zones can take the stock up to ₹290 or 293. A further decisive break above ₹293 will trigger a fresh rally to ₹311. The bullish outlook will get negated only if SBI breaks below ₹276 decisively. The next target is ₹270. Traders with a medium-term perspective can go long at ₹282 and accumulate at ₹279. Stop-loss can be placed at ₹269 for the target of ₹308. Revise the stop-loss higher to ₹285 as soon as the stock moves up to ₹292.

ITC (₹277.2)

ITC has been oscillating around ₹280 over the last two weeks. The near-term view is mixed for the stock. Key near-term supports are at ₹276.5, ₹273.5 and ₹271. A break below ₹276 can take ITC lower to ₹273 and ₹271 in the near term. However, the outlook will turn negative only if the stock declines decisively below ₹271. In such a scenario, a fall to ₹265 or even ₹260 is possible in the coming days. On the other hand, if ITC manages to sustain above ₹276, a bounce to ₹288 or ₹290 can be seen in the near term. But, inability to breach ₹290 levels can drag the stock lower to ₹275 and ₹273 again. The short-term outlook will turn positive only if ITC manages to breach ₹290 decisively. This break can take the stock higher initially to ₹297 and ₹300 levels. A further break above ₹300 will pave way for the next target of ₹307. Traders holding long positions at ₹283 and ₹280 should remain cautious. Retain the stop-loss at ₹273 for the target of ₹298. Revise the stop-loss higher to ₹285 as soon as the stock moves up to ₹289.

Infosys (₹661.4)

After inching higher in the initial part of the week, Infosys tumbled over 2 per cent on Friday, giving back all the gains. The price action on the daily chart keeps the downtrend intact. Immediate support is at ₹655. A break below it can drag the stock lower to the crucial support region of ₹635 and ₹630. The presence of the 200-day moving average and the 38.2 per cent Fibonacci retracement level makes the ₹635-630 region a crucial support zone. If Infosys manages to bounce from this support zone, an up-move to ₹670 and ₹680 is possible. However, the outlook will continue to remain negative. An eventual break below ₹630 will drag the stock lower to ₹600 and ₹590. Traders can hold the short positions taken at ₹670 and ₹675. Retain the stop-loss at ₹710 for the target of ₹600. Revise the stop-loss lower to ₹665 as soon as the stock moves down to ₹655. The outlook will turn positive only if the stock manages to rise past the psychological level of ₹700. But such a strong up-move looks less probable at the moment.

RIL (₹1,093.3)

RIL inched higher for the second consecutive week. The stock was up 1.8 per cent last week. It made a high of ₹1,117 and has come-off slightly from there. The stop-loss on the short positions has been hit. Immediate support is at ₹1,085. If RIL manages to sustain above this support, an up-move to ₹1,135 or ₹1,140 is possible in the near term. Inability to breach ₹1,140 can pull the stock lower to ₹1,100 and 1,085 levels again. But a strong break above ₹1,140 will boost the momentum. Such a break can take the stock up initially to ₹1,175. A further break above ₹1,175 will then pave way for the next target of ₹1,200. On the other hand, if RIL declines below the immediate support level of ₹1,085, it can fall to ₹1,055. A break below ₹1,055 will then increase the likelihood of the down-move extending to the crucial medium-term and the 200-day moving average support level of ₹1,035. A bounce from this support can trigger a relief rally to ₹1,100 or even higher levels. But a break below ₹1,035 can drag RIL lower to ₹1,000 or ₹990.

Tata Steel (₹573.3)

Tata Steel surged over 2 per cent intra-week but failed to sustain higher. The stock made a high of ₹587 and has come-off, giving back all the gains, and closed the week on a flat note. An inverted head and shoulder pattern is visible on the charts. The neckline support of this pattern is poised in the ₹564-563 region. Though a dip to test this support zone cannot be ruled out, the outlook will turn negative only if Tata Steel declines decisively below ₹563. A strong break below ₹563 can drag the stock lower to ₹550 or even ₹540 in the coming weeks. But if Tata Steel manages to sustain above ₹563 and reverses higher, it can gain fresh momentum. In such a scenario, a rally to ₹595 or ₹600 is possible in the near term. Inability to breach the psychological level of ₹600 can trigger a pull-back move to ₹585 or even lower levels. But a strong break above ₹600 will see fresh buyers coming into the market. Such a break will then increase the likelihood of the stock targeting ₹625 and ₹640 thereafter.

Gurumurthy K

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