Random ramblings of a technical analyst

Barriers in life come and go but 8,350 is acting as a tough one since the third week of April. This consolidation at the bottom has taken shape of a bullish H&S pattern. A move above the same could result in reversal of the trend.

May 16, 2015 07:05 IST IIFL Pritesh Mehta |

Trade what you see, not what you think

Whoever said Sell in May and go away, must have been right many time during the week as indices swung between red and green almost everyday. What lies ahead is something to speculate for sure but let’s take a look at what the charts are telling us for now.








-Nifty hourly chart looks exciting


Barriers in life come and go but 8,350 is acting as a tough one since the third week of April. This consolidation at the bottom has taken shape of a bullish H&S pattern. A move above the same could result in reversal of the trend. 

-BankNifty the apple of traders’ eye besides the Nifty, has fallen from higher levels. However, weekly chart indicates that it is moving higher along supported by its 50-WMA. So there is light at the end of the tunnel.


- CNX Auto Index mirrors the emotion of BankNifty


- Leadership sectors (BankNifty & CNX Auto) are at historic support levels. Uptrending sectors tend to provide pullback from strong support levels. So watch the space for action.

-CNX PSU Bank index has negated a bearish H&S pattern around 3,300. Whenever such pattern is voided, implications of the same tend to be extremely positive.



-Should the market reverse from current levels, traders should be able to make the most of this opportunity by focusing on bottoming out stocks.
CESC: In 2015, it has lost 15% so far, as it revisited levels of May 2014. However, it found support at its previous breakout point of May 14 and appears to have bottomed out. CESC built a flat base last month before attempting a breakout in Friday’s trade. CESC looks set to recover lost ground.


Colpal: Bullish consolidation in uptrending stock always breaks on the upside. Colpal, after a low of Rs1,441 in October 2014, has rallied sharply making a peak of Rs2,198. Thereafter, its movement is restricted to a triangle pattern. A close above 2,080 could see the stock attempting its previous peak.


That’s it for this week. Watch this space every week or whenever the charts demand extra attention.
 
The author is Senior Technical Analyst, IIFL

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