raj_rishav

ITC : Bullish Divergence on Pullback

Long
NSE:ITC   ITC LTD
ITC is one stock that is exhibiting 4 strong buy signals:

1. Price Action - The stock has been trading in a price action value area as indicated in the box. Can zoom out to get a better view. See the linked ITC idea on how to exploit it best.
2. Regular Bullish Divergence - There is a clear bullish divergence as indicated on chart.
3. Declining volumes also confirm the divergence.
4. Pullback from 50 DMA - The stock has taken continuous support from the 50 DMA since its uptrend in May and unless its breaking that trend due to a significant correction in the Market over the next week, the pullback offers a good entry point.

So I would be going long on CMP with a SL at 192.
Risk averse may want to take positions above 195 (50 DMA).

Immediate targets would be 196.5, 198, 200, 202.
If it sustains above 202 on the hourly chart - there is a gap to fill opening targets 207, 210.

P.S. I see a lot of traders here posting statutory warnings about how they aren't responsible if the reader loses money by following the idea blindly. Same Pinch!

Comment: If it breaks with conviction below 192, will initiate short positions
Trade active: Buy at 193
Trade active: Trailing SL modified to 194
Comment: 194.5
Comment: I use VWAP as Trailing SL if anyone's curious
Trade closed: target reached: Trailing SL hit
Comment: I will re-enter long positions at 193 levels

Comments

isnt Increase in Momentum while the price is going down a bearish continuation signal?
I am long for the last one week @ 195 , two days in a row, ITC hit a high at 198 and reversed and On Friday it hit an Intraday high of 197 and reversed.
+1 Reply
raj_rishav kurian_eq
@kurian_eq, you are right but overall price trend is in an uptrend as can be seen on the all MAs and its currently near the price action support. So, I am reading it as a trend reversal divergence. Won't take short positions unless breaks 192 convincingly. This is a high Beta stock, your observations are inline with NIFTY & NIFTY FMCG. Please refer my linked ITC idea of last week on how I have traded the ranged price action.
Reply
Use the trend lines on weekly chart and it's trading in an channel this week support is at 188.20 and resistance at 216-218....so if it keep trading in this channel by end of this year. Then target will be 256...any close above or below this channel is opportunity for big short or long...
Reply
but what if nifty drops down ?
my view was same but it is looking weak because of nifty is not moving upward..
Reply
raj_rishav Vaishali420
@Vaishali420, as added in comment, I won't take short positions unless it gives a decisive break below 192 with a close below on the hourly chart. It may turn out to be a bad bear trap
Reply
bro.. the divergence is not plotted right...
Reply
raj_rishav singhramandeep7186n
@singhramandeep7186n, Price making LH while Momentum making HH drawn with Orange trend line.
Reply
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