CNX Realty - Breaking Out after a Decade

NSE:CNXREALTY   Nifty Realty Index
The CNX Realty Index was created in January 2007. The index began with a base level of 1000 and made a quick high of 1878.45 in January 2008 at the peak of the 2003-2008 bull market.

The great crash followed and the CNX Realty Index collapsed to 161 (-90 pct ) by March 2009. This was followed by a strong 6 month long pullback rally where CNX Realty peaked at 630 odd levels in October 2009. After this short lived pullback, CNX Realty entered a long term bear market and made fresh lows in 2013 and 2016.

The CNX Realty Index has spent the last 10 years (2011-2021) in a range between 140-370. The index is now poised to break out of its decade-long consolidation to the upside.

The CNX Realty Index made a 10 year closing high in February 2021 (349.8) but it has struggled at the historical resistance zone of 365-370. This week, CNX Realty closed above 366 for the first time since January 2018.

Once this level is taken out on a monthly basis, CNX Realty should move significantly higher in the medium to long term.

Support/ Stop loss : The 6 month low of 298 is an excellent stop loss for this trade

Targets : Since this is a breakout after a decade long consolidation, we can expect significantly higher levels for CNX Realty in the months and years ahead. A simple Fib retracement, gives us a target of 539 (23.6 pct ) which coincides with the MAY 2011 high of 534.. making 534-538 our primary target.

The May 2008 monthly gap at 978 which coincides with the 50% Fibonacci retracement level of 1002 would make a possible long term target.

PS: I have used the monthly chart to describe what is for now a weekly breakout. This is an investment call not a trade and can take more than a few years but it has an excellent Risk-Return spectrum. Also, the CNX Realty is not a traded instrument (no ETFs either), so one can check the components/weights from the NSE website and trade/invest accordingly.


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