How To identify whether stock is bottoming out?
This Idea is my Bank of Baroda Positional Trade in diwali. Posting this because I got one query for my Recent BHEL Idea, where I've used similar Technique.
As you can see 57 level marked with blue line is the level from where stock gave breakout twice, 2007 & 2009. it was a strong Resistance back then.
In 2007 it moved from 54 to 92
In 2009 it moved from 54 to 211
Another important level was at 38.
When market crashes in march 2020 it was moving in a band pf 38 to 57. Double bottom was also formed in that band.
Another thing i observed was that stock was moving away form 200 EMA
So mean reversion was also pending.
200 EMA was around 103 which was more than double. There was also a volume spike. Overall these made me conclude that stock was bottoming out. Based on buy call was at 46 during Diwali for a target of 92 baeed on support and resistance levels. Check zoomed pick below
As you can see 57 level marked with blue line is the level from where stock gave breakout twice, 2007 & 2009. it was a strong Resistance back then.
In 2007 it moved from 54 to 92
In 2009 it moved from 54 to 211
Another important level was at 38.
When market crashes in march 2020 it was moving in a band pf 38 to 57. Double bottom was also formed in that band.
Another thing i observed was that stock was moving away form 200 EMA
So mean reversion was also pending.
200 EMA was around 103 which was more than double. There was also a volume spike. Overall these made me conclude that stock was bottoming out. Based on buy call was at 46 during Diwali for a target of 92 baeed on support and resistance levels. Check zoomed pick below
Comment:
Please note this is rewinded chart back to November 🙏🏾