Tata Steel has shown some fantastic momentum in recent years and now investors who have missed the move are waiting for a correction or feels the stock is overvalued. But lets talk about the stock technically again! In my last post on Tata Steel at “Still avoiding Metal Stocks? Not Tata Steel Now!! i did recommend to go long on the stock at 447 but still Tata still is yet to start a Rally! My view is purely for long term investors as what i am gonna post today is on Monthly charts of Tata Steel from which patterns are most favorable to investors with the view of minimum 6 months of holding period.
So the chart attached is clearly showing positive momentum for the stock since almost 2015 but still the actual technical rally is to kick-off. The Blue lines are showing the Bullish Formation : ” Double Bottom “. The pattern has a neckline at 575 which means stock would give a buy over the close at 575 which is termed as breakout in technical terms. If we try to channel out its move from 2015, we get a perfect parallel line movement and it seems to have equal breakout level on upside at 575 as double bottom making July month crucial for the stock and new investors. Ofcourse indicators are into overbought zone but still it has potential to move much ahead. The dotted blue line from the neck line gives us pattern target of 900-940 which is almost 80% upside from the current levels and for those who followed my last post on the stock has 100% upside.
On the risk side, stock has support of 20 month avg at 400 which is also support drawn by connecting 2007-08 highs. MACD which i consider to be the tool of long term positional traders has just crossed 0 mark on monthly chart which supports my view of Double Bottom breakout pretty soon.
So strategy for Long term investors.” Buy Tata steel at 575 tgts 900-940 sl: 400″ Rd disclaimer before investing
In recent past, Nifty has been quite volatile but Nifty Bank Index has shown some steady growth from 18900 to 19700 levels. One common characteristic of charts of both nifty and nifty bank is that both are channeling in downside direction and have closed exactly near to resistance line yesterday. Now what next?? Surely havent yet got any confirmation for more upside on Nifty but a slight more upside could be witnessed on Nifty bank charts. As per my Wave counting, we are still into a corrective Wave but we can witness a reaction move in upside direction and Nifty Bank could outperform during this reaction as its about to move out of the channel
As we even look at some other factors, say Indicators, they have also given a positive crossover from the oversold zone indicating a short covering. Secondly, Nifty bank has taken strong support on 50 day average giving a sense of bulls momentum for near future. Thirdly, Option writing is suggesting resistance this expiry around 20000! But traders should take position in next expiry with target of 20233 in mind where probability of Wave B ending is expected!
Safe Traders: “No Trade until Clear sign”
Risk Traders: Buy with tgt 20230 SL: 19450
Rd disclaimer before investing on my view!
Nifty Drifts successfully on the U-Turn to resume the unfinished up-move. Until yesterday, charts were smelling that we could witness a profit booking ahead of expiry and year end but i was proved wrong today. Just like a car gets off road during race and its not expected to be back on track, Nifty was the same but it has been successfully to be back on track with “Morning Star Pattern” daily charts. As you call can notice on the chart that yesterdays close was with Grave Stone Doji exactly on 100 Day SMA, i was expecting it to breakdown which was also supported by Options. But yellen’s speech last night proved everyone wrong on Daily chart and it has resumed uptrend which was still intact on weekly charts. Now upside resistance is at 200 day average at 7850 which is also nearing to weekly channel resistance at 7945. On the downside 100 Day SMA at 7590 should act as immediate support.
Havells has been in strong consolidation zone of 260-310 since almost a year so but during this phase “inverted Head & Shoulder” pattern has emerged on weekly charts. Generally, target is calculated from the neckline which in our case is at 309. So approximately target is arrived at 390 as the distance from low on the had to neckline is 80 which is added to neckline. Fundamentally too, next quarter is considered to be best in terms of sales due to summer. Indicators on weekly charts too have confirmed positive crossover on RSI and MACD. So just buy the stock in portfolio for a quarter or two.
Nifty traded in the strict range throughout the day and remained volatile between the range. But the close was with some bearish outline on the charts. Firstly, a Grave Stone Doji has been embarked on daily chart which indicates a bearish mood among traders who closed positions or markets to days low. Secondly, Nifty ended exactly near to the 100 day average at 7594 making tomorrow’s open most pivot factor for the expiry close. If the open is even a point lower to 7594 than it would confirm both the bearish factors formed today. On the option side, 7600-7700 Calls have added open interest suggesting heavy writing and sealing a wall for next two days on the upside. Even the MACD short moving average has crossed over negatively over the long one suggesting a Sell on rise strategy. So my Nifty strategy remains intact as suggested Yesterday.
Crude has been the most outperforming asset class this 2016 in terms of Rally but now somewhere it is nearing a small profit booking mode. As i initiated long call a way back at $32 with targets of $40 but now i would take a sell on the crude. Even Iran has intimated that they wont cut production atleast for some time in near future so supply could constantly rise. As you all could notice on the daily chart, we have seen a “Inverted Hammer” on Friday and also closed 50% on the green body of previous candle making charts more weak. On the other side, we are witnessing negative divergence of Price to RSI so we can surely initiate a short call on the crude with the targets for 100 day average (green line) on the support side.
Strategy: Sell with Sl $41.20, tgts 36.50/35.30
Nifty finally breaks the trap line at 7580 and we closed above 7600 above first time in last two months. My stop loss 7600 on closing basis have been triggered today. Technically, still the road is not clear to take a fresh longs as many resistance points are hitching around same levels. While todays high had triggered Double bottom target which was 7615 now the next resistance is Broadening formation trend line around 7660. Coincidentally 7615 is also a 100 EMA which has been acting as strong resistance since we traded below the same in August downfall last year. So now the range of 7600-7700 because wait and watch situation. So currently No fresh positions recommended for new players but if you are long for short term than time to start booking profits for march series while if short players havent squared off than now they can take lil risk till 7700 which is strong resistance from options data. So now i would prefer stock specific trading till end of Expiry as we have many holidays too.
Nifty traders are victim of a trap line near 7580, which has been engulfing bulls since January’16. Today to we made high exactly at around 7580 which is a coinciding resistance of many studies. On the other side even the 7600CE has been witnessing continuous call writing since the start of expiry. Currently indicators are flat on daily charts since we are trending range bound. Even a Broadening formation has can bee seen which has a symbol of perfect volatility. Nothing can be predicted from the candlesticks as of now but may be tomorrow we can get something interesting on weekly charts after a close. So i am curious for tomorrow close, though my sell call on Nifty is intact since March 3rd Post.
On the 1st of March i initiated a sell call on USDINR on Hedge against Dollar at around 68.64 and today its target has been achieved. We have seen dollar index weakening which had its effect on our currency too. Rupee had been trading in the strict upper range today we are moving beyond the support to strengthen more. Attached chart is weekly chart and we are expecting this reversal to be strong in nature as indicators are also staring to support us. Also on daily charts, 100 DMA which was around 66.90 has been breached convincingly today. So would like to initiate a fresh strategy for the USD INR for Sell on rise.
Strategy: Sell on Rise (CMP: 66.70) SL: 67.20 tgt 65.50
Nifty had opened up near the resistance level as i mentioned in the morning near 7560 and we did trade above the same for few mins but we could not sustain above the same for much time. Markets had stuck in the strict range after opening hours and we ended with a Dragon fly Doji on daily charts which is sign of Bearish mood ahead. Though for confirmation we need a day more tomorrow. CPI numbers are just announced and they have been improving which is a good for a bit. Indicators are flat on daily charts so now all eyes on candle tomorrow. If we get a lower low tomorrow than for sure my target mentioned on Nifty in Reserve is coming. So fingers crossed for tomorrow. 7560 remains crucial resistance for tomorrow