Market summary: Indian benchmark index NSE Nifty open marginally lower and after making intraday low of 10254, bounced about 90 points in the last one hour to close at 10321.75.
The index is taking support at 20 Day SMA line (At 10304.8) for the last three consecutive trading sessions. However, Nifty close below 10270-10300, will take the index down to 10150-10200 mark. On the downside 10150 is a strong area for Nifty which is a confluence of support line and 100 Day SMA line. On the upside, 10 Day SMA (At 10375) is a important resistance area, close above which will resume its fresh upward journey.
(Also Read: A comprehensive study on Support & Resistance)
Daily RSI is very close to the upper limit at 57.1 (assuming 60 to be the upper limit), CCI is just above zero (1.43), ROC also marginally above the zero line (at 0.25) and Choppiness index just at the 50 line. Given the above scenarios, we have a NEUTRAL stance on Nifty on Monday. The index close in the coming days will decide the fate of Nifty going forward.
STOCK IDEA: LIC Housing Finance
In the weekly chart, LIC Housing is taking standing at a 50 % retracement area (move from 390 to 795). The stock just bounced from the uptrend line (which started from August 2013) which is a very strong support for the stock. Moreover, there is a confluence of 100 Week SMA line and the uptrend line makes this level more valid support point.
Moreover, in the daily chart, the uptrend line (indicated with brown colour) and the support line (indicated with blue colour) is almost converging at the same area which further increases the validity of this point. The blue line which was acting as a strong resistance area now may act as a support for the stock. This concept is known as principle of polarity where the previous resistance once broken acts as a support and vice versa.
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