After acting as support for two consecutive sessions, Nifty breached and closed below its 100-DEMA (Double Exponential Moving Average). The index has failed to witness follow through rally post occurrence of “Bullish Hammer” around 100 DEMA which indicates the prevailing downside pressure. The breach and close below 11,650 level of consolidation support distorted prevailing bullish structure in place. Hence, the close below 100 DEMA (11,540) will target gap support range of (11,406-11,426) on an immediate basis. It’s prudent to book profits for existing shorts on a test of gap support and await for bottoming out/reversal formations to occur around the support levels for initiating longs as presumption of reversal for larger move on the upside remains intact.
Stock: Hindustan Unilever (HUL)
CMP: Rs 1,707
The stock is witnessing sharp downside post occurrence of “Triple Top” around life highs around (Rs 1,840 - Rs 1,860). Daily relative strength index (RSI) is approaching oversold levels without any divergence with price. Hence, the downside momentum is expected to continue target its recent swing lows around Rs 1,650 - Rs 1,660 levels. It can be sold with stop placed above recent hourly swing high of Rs 1,755 for Rs 1,650 to be obtained in the coming sessions.
Stock: HDFC BANK
CMP: Rs 2,389
The stock is consolidating in the range of Rs 2,365 - Rs 2,395 after witnessing sharp correction in the recent past. The occurrence of “Bullish Piercing” on the daily scale and prevalent “Bullish Divergence” on hourly RSI relative to price along with subsiding momentum on the downside indicates a short covering bounce is in the offing for the stock. It can be bought with stop placed below “Bullish Piercing” low of Rs 2,366 for test of Rs 2,434 price confluence zone.
Disclaimer: The analyst may have positions in any or all the stocks mentioned above.