The Nifty gave up all the gains of the previous trading session, and displayed persistent selling pressure after closing at day’s low. Occurrence of “Bullish Hammer” followed by “Bullish Engulfing” indicates continued short covering at lower levels. Unless the index breaches the 100 WEMA (10,790) possibility of short covering move with a target of recent swing high of 11,150 is a likely scenario as most oscillators rest in their respective oversold zone. Only a move surpassing 200 DEMA (11,280) would indicate a short term bottom in place while 100 WEMA (10,790) is expected to act as strong downside support for the index in coming sessions. With the occurrence of two consecutive bullish formations, along with RSI surpassing its signal line, short-term traders can initiate longs with a stop placed below recent swing low of 10,782 for a continuation of short covering move targeting 11,150 & 11,230 in coming sessions.
STOCK: CENTURY TEXTILE AND INDUSTRIES LTD
CMP: Rs 886
The formation of “Gravestone Doji” on the daily scale along unsuccessful attempt at breaching above its 20 DEMA indicates recent rally is being a dead cat bounce for the stock. Breach and sustenance below 890-895 support zones indicate the stock might continue its downward momentum targeting its recent swing low around 840 levels and a possible breach of 830 levels. The stock can be sold with stop placed above “Gravestone Doji” high of 912 levels for a retest of recent swing low of 842 and possible breach targeting 830 levels.
CMP : Rs 1,638.80
The stock witnessed upside momentum post occurrence of “Bullish Engulfing” formation on similar lines witnessed on 9th of July. Stock held firm around the 1,570 support levels forming an interim “double bottom” suggesting the move could head further targeting its recent swing high of 1,678 and a possible breach aiming at new life highs. The stock can be bought with a stop placed below recent swing low of 1,568 for 1,678 and a possible new life high in coming sessions.
Disclaimer: Analyst may or may not hold positions in one or more stocks