Stock Picks of the Day: 2 midcaps that could return 10-11%

The Nifty started off higher following positive global cues. At the higher end, the index found resistance at its recent high of 11,078 on Wednesday, which resembles a double top formation on the daily chart. Formation of a double top suggests exhaustion of the bullish trend in the market and a likely reversal in the short-term. The index has formed a bearish AB=CD on the daily chart, which suggests the possibility of a negative reversal in the short term.

On the daily chart, the relative strength index (RSI) has failed to touch a new high with a price rise, which indicates negative divergence. The latter suggests that momentum is expected to remain negative in the near term.

Going forward, the trend is expected to remain negative as long as the Nifty sustains below the recent high of 11,078. The index may move down towards 10,820, and below that we see a further correction towards 10,670 levels.