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LIC Housing Finance; time for bulls?

 

LIC HOUSING FINANCE settled at 321.90 up by 5.78% on Tuesday. Stock had been staying in a consolidation phase that took shape of an ascending triangle and in today’s session it broke through the resistance line of this triangle consolidation and settled well above key resistance of 312 suggesting dominance of bulls. Stock has been staying above its 9 days SMA on daily chart keeping a short-term bullish trend in picture.

Stochastic is now approaching overbought territory along with bullish cross above its signal line suggesting a strong bullish momentum. MACD has been staying in positive territory and now its parting upward from its signal line suggesting development of fresh bullish momentum.

Direction and momentum are two important components for any chart to anticipate future price movement and current trend and momentum on chart provided above is suggesting bullishness.

Breakout of triangle pattern can be used to determine potential destination for current move and if the base of tringle added in to breakout then areas of 355-360 can be considered potential target for the current move as long as price move is supported by strong bullish momentum as described above. Tweezer bottom is formed near 298 zones which is just above the moving average which is also sloping upward. Any failure of 298 might violate on going bullish move and then weakening of upward swing can be seen. As long as price holds above 298 this move is likely to remain intact until stock hits 350-360 zones.

Based on option data for current expiry today huge long build was seen in 320, 330 and 340 strike call options where as huge short covering seen in 310 and 300 strike call options. On put side put options above 320 strike doesn’t have enough open interest whereas short unwinding seen in 270 and 280 strikes where as fresh put writing is happening in 300 and 310 strike put options.

Short unwinding in OTM puts and short covering ITM calls is favoring a scenario where market shifts its resistance upward and is sign of bullish move.

Based on developments on charts and option data available on NSE’s website on can look for buying opportunities in LICHSGFIN around 308-305 zones with a protective stop loss below 298 for a potential target around 350-360 in short term.

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