Reliance Industries: Opportunity in a Demand Zone Confluence

Oct 15

Reliance Industries Limited (RIL), one of India’s largest conglomerates, has recently experienced a drop in its share price. In the second quarter of FY25, the company reported a 5% decline in consolidated net profit, down to Rs 16,563 crore. While this has weighed on the stock price, it also presents a buying opportunity for traders.

Chart Analysis: A Confluence of Demand Zones
Let’s take a closer look at the technical picture. If you analyze the weekly chart of Reliance Industries, you’ll notice that the stock is currently trading in a demand zone. This zone is an area on the chart where there is strong buying interest, and it could potentially support the price, leading to a bounce.
What makes this setup more attractive is that the stock is also sitting in a daily demand zone, creating a confluence between the two timeframes. Confluences like this increase the probability of a successful trade since multiple factors align in the same direction.

Entry 1: Reversal Candlestick Pattern at the First Demand Zone
The first potential entry point for a trade comes from the RBR (Rally-Base-Rally) zone, which is the current demand zone on the weekly chart. If you observe a reversal candlestick pattern, this could signal the start of a move higher.
Wait for a confirmation of the reversal pattern before entering the trade. This pattern could serve as a signal that the market is ready to rally from the current demand zone. Let’s call this Entry 1.

Entry 2: The Second Demand Zone - A Stronger Opportunity
If the price continues to drop, there’s a second RBR demand zone below the current one, and this could provide an even better buying opportunity. What makes this zone particularly strong is that it coincides with a previous resistance level, which could now act as support again .
This is known as the Act of Polarity, where old resistance becomes new support & this is also confluence. Entry 2 is compelling because the stock had previously been in a tight consolidation, and this demand zone formed as the price broke out of that consolidation. Now, as the price approaches this zone again, it’s a high-probability area for a bounce.

For Entry 2, you can place a stop-loss just below the demand zone, allowing a small buffer. This will protect your trade if the price falls further. Your first target could be the daily supply zone around 2928.

Despite recent setbacks, Reliance remains one of the strongest companies in India, with diversified business interests across sectors like telecom, retail, and energy. The current pullback is more of a short-term correction rather than a sign of fundamental weakness.

The confluence of demand zones on the weekly and daily charts offers traders a high-probability setup in Reliance Industries. While waiting for a reversal candlestick pattern at the first demand zone is a more conservative approach, the second demand zone presents a stronger opportunity due to confluence of its location at a previous resistance level, which now acts as support. Proper risk management with a stop-loss below the second demand zone ensures that traders are protected if the price drops further.

Lastly, thank you for your support, your likes & comments.

Disclaimer: This analysis is purely for educational purposes and is not intended as a trading or investment recommendation. I am not a SEBI registered analyst.