Technical stocks to watch out for on Wednesday

Castrol India Ltd: Considering the daily timeframe, the stock has witnessed nearly 9 per cent rally from the low of August 3, 2020, and thereafter, it traded in the range of Rs 123.25-Rs 119.80 level. Due to the narrow range, Bollinger Bands have contracted on the lower timeframe, i.e. 60 min and 75 min, which indicates an early sign of a bigger move. The stock's relative strength index (RSI) has reached its highest value in the last 14-days, which is bullish. Also, it has managed to close above the 60 mark after a span of over one month. Currently, the stock is on the verge of giving a breakout of a horizontal trendline resistance on the daily timeframe. If it moves above the zone of Rs 123.30-Rs 123.60, we may see a bullish momentum in the stock.

Jyothy Labs Ltd: The stock is forming a series of higher high and higher lows after registering a low of Rs 85 as on March 23, 2020. In the daily timeframe, the stock has given a horizontal trendline breakout along with a relatively higher volume. Currently, the stock is trading above its short and long-term moving averages. Talking about the indicators, the 14-period RSI on the daily timeframe has marked a fresh 14-period high, and also, the RSI is trading above its previous swing high. The daily RSI is in a super bullish zone. The daily MACD stays bullish as it is trading above its zero line and signal line. Further, the ADX is very strong as it is above 50 mark on the daily timeframe. The +DI is much above the -DI and ADX show strength in the trend. Technically, all the factors are currently aligned in support of the bulls. Hence, we would advise the traders to be with a bullish bias. On the downside, important support for the stock is placed at the zone of Rs 138-137 and on the upside; an immediate resistance is seen at Rs 155 level.

Max Financial Services Ltd: The stock has formed a reversal spinning top candlestick pattern as on July 22, 2020, and thereafter, witnessed a correction. Considering the daily timeframe, the stock has given a breakout of a falling wedge pattern. With this falling wedge breakout, the ADX, which shows the strength of the trend, turned upside and moved above the -DI. The buying volumes are higher than the last four days’ fall, which indicates that it is accumulated by smart investors at a lower level. The leading indicator, 14-period RSI has bounced from the level of 40. Currently, the RSI is quoting at 51.89 level and it is in a rising trajectory. The daily stochastic oscillator is suggesting some bullish strength as well since per cent K is above the per cent D. Hence, we expect the bias to remain positive as long as the stock sustains above Tuesday’s low of Rs 517.40 level. On the higher side, the level of Rs 555, followed by Rs 564, would be seen as the next resistance zone for the stock.

Motilal Oswal Financial Services Ltd: The stock has formed a reversal spinning top candlestick pattern as on July 24, 2020, and thereafter, witnessed a minor correction. During this corrective phase mostly, the volume is below 50-day averages volumes, which suggests that it is just routing a decline after a robust move (Rs 426-Rs 734.50). Considering the daily timeframe, the stock has given 10 trading sessions consolidation breakout. On the breakout day, the stock has witnessed the highest volume after January 2020. Further, the stock has formed an opening bullish Marubozu candlestick pattern on the breakout day, which indicates extreme bullishness. Among the momentum indicators, the daily RSI is currently quoting at 65.59 and it is in a bullish trajectory. The MACD line just crossed the signal line, and the histogram became green. In the daily timeframe, ADX is 20.01 and suggests that the trend is yet to be developed. Directional indicators continue in the ‘buy’ mode as +DI continues above –DI. Going ahead, we expect the bias to remain positive as long as the stock sustains above Tuesday’s low of Rs 673.50 level.

Sobha Ltd: On Tuesday, the stock has given a downward sloping trendline breakout on the daily timeframe, formed by connecting swing highs from July 20, 2020. This breakout is confirmed by the above 50-day average volume. Along with this trendline breakout, the stock, after a span of over six months, has managed to successfully close above its crucial medium-term moving average i.e. 100-day EMA. The stock's relative strength index (RSI) on the daily chart has moved above its recent swing high and has marked a fresh 14-period high, which is bullish. The MACD is above the zero line and signal line and the MACD histogram suggests bullish momentum. And most importantly, the MACD line crossed the prior swing highs. Hence, we would advise the traders to be with a bullish bias. On the downside, important support for the stock is placed at the zone of Rs 229-226 level.