Muthoot Finance | VCP Pattern in Play
Muthoot Finance | VCP Pattern in Play 🔍
Technical Overview
📈 Trend: Uptrend, trading within an ascending channel.
🔄 Pattern: Volatility Contraction Pattern (VCP) in progress, signaling potential explosive movement.
📉 Correction: The stock corrected ~15% during the recent market sell-off but rebounded strongly, re-entering the channel. It’s now only ~9% off its recent ATH, showcasing resilience.
Key Levels to Watch
✅ Entry Point: Breakout above ₹2279 with strong volume and a wide-range candle.
🎯 Targets:
T1: ₹2492 (R:R = 1:1)
T2: ₹3200+ (post-market stabilization, aiming for R:R = 1:2)
🛡️ Stop Loss: ₹2067.9 (below the most recent swing low to manage risk).
Strategy
1️⃣ Enter 30% position on a clean breakout above ₹2279. Wait for a retest and continuation to add the rest.
2️⃣ If the breakout is sharp and you miss the entry, wait for a retest and continuation before entering, do not enter in FOMO.
3️⃣ Once T1 is hit, book partial profits to lock in gains, given the weak market conditions.
4️⃣ Hold the remaining position as per your risk appetite and trail your SL to protect profits.
Why This Stock?
⭐ Resilience: Despite the correction, Muthoot Finance re-entered the channel, showing strength against market headwinds.
📊 Strong Indicators: RSI is rising, signaling bullish momentum, and the VCP pattern suggests tightening volatility before a potential breakout.
📉 Controlled Drawdown: From its ATH, the stock fell just ~9%, demonstrating relative strength compared to the broader market.
⭐Trading above Key DMAs
Key Risks to Consider
⚠️ Weak Market Conditions: Broader market trends remain bearish, trading below the 200 DMA, increasing the chance of a failed breakout.
⚠️ Volume Dependency: Strong breakout volume is essential to validate the pattern.
⚠️ Market Correlation: Any further market correction could pressure this trade setup and the probability of hitting the SL increases. So trade light.
Who Should Trade This?
1️⃣Aggressive Traders: Can follow the breakout strategy with proper position sizing.
2️⃣Conservative Traders: Wait for market stabilization and a close of NIFTY 50, Nifty 500 above the 200 DMA before entering any trade.
Actionable Insights
🔒 Lock Partial Profits at T1: Secure gains to mitigate risk in this volatile environment.
📈 Trail Your Stop Loss: Once T1 is achieved, manage the trade dynamically to maximize returns.
Disclaimer
This analysis is for educational purposes only and not financial advice. Please conduct your own research and analysis before making any investment decisions. Trading involves significant risk.
Trade wisely and stay disciplined! 🚀📊
Technical Overview
📈 Trend: Uptrend, trading within an ascending channel.
🔄 Pattern: Volatility Contraction Pattern (VCP) in progress, signaling potential explosive movement.
📉 Correction: The stock corrected ~15% during the recent market sell-off but rebounded strongly, re-entering the channel. It’s now only ~9% off its recent ATH, showcasing resilience.
Key Levels to Watch
✅ Entry Point: Breakout above ₹2279 with strong volume and a wide-range candle.
🎯 Targets:
T1: ₹2492 (R:R = 1:1)
T2: ₹3200+ (post-market stabilization, aiming for R:R = 1:2)
🛡️ Stop Loss: ₹2067.9 (below the most recent swing low to manage risk).
Strategy
1️⃣ Enter 30% position on a clean breakout above ₹2279. Wait for a retest and continuation to add the rest.
2️⃣ If the breakout is sharp and you miss the entry, wait for a retest and continuation before entering, do not enter in FOMO.
3️⃣ Once T1 is hit, book partial profits to lock in gains, given the weak market conditions.
4️⃣ Hold the remaining position as per your risk appetite and trail your SL to protect profits.
Why This Stock?
⭐ Resilience: Despite the correction, Muthoot Finance re-entered the channel, showing strength against market headwinds.
📊 Strong Indicators: RSI is rising, signaling bullish momentum, and the VCP pattern suggests tightening volatility before a potential breakout.
📉 Controlled Drawdown: From its ATH, the stock fell just ~9%, demonstrating relative strength compared to the broader market.
⭐Trading above Key DMAs
Key Risks to Consider
⚠️ Weak Market Conditions: Broader market trends remain bearish, trading below the 200 DMA, increasing the chance of a failed breakout.
⚠️ Volume Dependency: Strong breakout volume is essential to validate the pattern.
⚠️ Market Correlation: Any further market correction could pressure this trade setup and the probability of hitting the SL increases. So trade light.
Who Should Trade This?
1️⃣Aggressive Traders: Can follow the breakout strategy with proper position sizing.
2️⃣Conservative Traders: Wait for market stabilization and a close of NIFTY 50, Nifty 500 above the 200 DMA before entering any trade.
Actionable Insights
🔒 Lock Partial Profits at T1: Secure gains to mitigate risk in this volatile environment.
📈 Trail Your Stop Loss: Once T1 is achieved, manage the trade dynamically to maximize returns.
Disclaimer
This analysis is for educational purposes only and not financial advice. Please conduct your own research and analysis before making any investment decisions. Trading involves significant risk.
Trade wisely and stay disciplined! 🚀📊
Note
One word of caution: Quarterly results are just around the corner, which could introduce significant volatility to this stock. Always factor in upcoming earnings announcements when planning your trades, as they can lead to unexpected price swings. Manage your risk carefully and trade with a clear strategy in mind.
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Disclaimer
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