Hot Stocks | Two buy and two sell calls for the next 2-3 weeks

Due to modest recovery towards the fag end, Nifty concluded the week gone by a tad below 11,200, marking more than a percent loss on last Friday.

Friday’s correction was no surprise to us as we have been consistently advocating caution in our intra-week commentary as well as in the previous weekly report.

The range of 11,300–11,350 is considered to be a sturdy wall, firstly, because it is the 78.6 percent retracement of the entire fall from 12,430 to 7,511.

Secondly, the 100 percent ‘price extension’ of the first up leg (7511.10 - 9889.05) from 8,806.75 precisely coincides around 11,300-11,350.

Now, if we take a look at the daily chart, the ‘head and shoulder’ pattern is clearly visible and this is what we mentioned in our daily commentary.

Friday’s low precisely coincides with the neckline level of this pattern. Hence, going ahead, a breach of 11,100 would lead to an immediate correction towards 10,975 – 10,875.

Here, 10,875 would be seen as key support because a breach of this would result in a strong corrective move in the next few days.

This was overall a price-wise hypothesis on Nifty, but we would also like to highlight one time-wise observation as well.