Nifty ended just above 22,500, marking a flat weekly close, on April 12. While the weekly chart shows little change, reverting to the previous week's close, the daily chart reveals a notable hesitancy at higher levels.
Prices have precisely retreated from the upper boundary of the 'rising channel' pattern, a formation we highlighted earlier during the week. Accompanied by a ' two-point negative divergence' on the RSI-smoothened indicator, a cautious approach is advisable for bulls camp at higher levels.
Traders should refrain from chasing buying opportunities at elevated levels and are encouraged to consider profit-booking on any bounce back. Notably, the range of 22,700 to 22,800 presents significant resistance.
Conversely, key indices hover slightly above their previous swing high, technically considered as a support level. For the Nifty, this lies within the range of 22,450 to 22,500, and a breach may trigger further profit-booking, potentially towards 22,300 and beyond in the near term. Traders should monitor these levels closely and adjust their trading strategies accordingly.
Further, Friday's market weakness was largely attributed to geopolitical concerns, underscoring the importance of closely monitoring these developments as they could impact market dynamics.
Here is one buy call and one sell idea for short term:
A few months back, the Central Depository Services (CDSL) prices witnessed a long-term bullish breakout, yet in recent weeks, it has been trading within a certain range. However, it's now showing signs of resuming its upward trend, as evidenced by closing above the recent congestion zone, affirming a breakout in the continuation channel pattern.
Notably, there has been an increase in trading volumes during the period of up-move as compared to the volume of period during consolidation, suggesting strong accumulation.
Even amid a weaker overall market, this particular stock showed strength on Friday. With prices comfortably above the key averages and oscillators indicating positive positions, the outlook for buying remains supported. Hence, we recommend buying CDSL around Rs 2,008 - 2,000, with a stop-loss of Rs 1,909 and target of Rs 2,185.
In recent weeks, on the daily chart, stock prices have been moving within a defined range. However, by recently breaking below the lower boundary of this range, a distribution pattern breakdown known as a 'Double Top' has been confirmed. This pattern finds support in a negative divergence observed in the momentum indicator RSI (relative strength index), where prices reached new highs but the oscillator did not.
The current downturn is further supported by increased trading volume, and prices have fallen below both the 20 and 50 EMA (exponential moving average), indicating a shift in momentum favoring the bears.
Given these observations, we anticipate further weakness in this stock. Hence, we recommend selling Cipla around Rs 1,397 - 1,405, with a stop-loss of Rs 1,440 and target of Rs 1,320.