Read the chart from left to right for a clear understanding. Stock: Allcargo Trade type – Swing Buy level: 348.10 (above breakout candle) SL: 318.75 (below the breakout candle) Target: 398 Risk/Reward ratio: 1.7
The setup uses price action and two indicators – RSI & MACD for confirmation of the signal. Chart formed a Gap on 02nd November. Gaps are formed due to strong buying/selling interest. These gaps are considered to act as strong support levels on the chart.
Rationale behind the bullish view: - Price recently took support at the gap range and reversed its direction and started making higher highs and higher lows. - The latest Strong green candle accompanied by good volumes broke out above the previous high. - Price making lower lows but RSI making higher lows. This is a positive divergence indicating buying interest - RSI above 55 and trading above its EMA indicates buying strength. - MACD crossed over the signal line confirming the trend.
Taking the trade: - The buy level is slightly above the breakout candle. The buy trade can be executed on an hourly timeframe if the price sustains above the breakout candle high. - If the trade works out as expected, Although the target and SL are fixed in this trade, both should be shifted up when the price makes a higher high and higher low. - Strict stop loss should always be followed for risk management.
This is not a buy/sell recommendation. I'm posting my analysis here to track it and to learn from the community. Follow me if you like my analysis. More detailed trades coming up.