Rounding Bottom (Cup and Handle) Setup on Suryalakshmi Cotton Mi
This chart displays a long-term bullish setup forming in Suryalakshmi Cotton Mills Ltd. on the weekly timeframe. The stock has been consolidating for several years, showing a distinct rounding bottom pattern, which is a classic reversal signal often associated with significant upside potential. Here's a detailed breakdown of the trade idea:
Technical Observations:
Rounding Bottom Formation:
The price action from 2014 to 2024 clearly outlines a massive rounding bottom, suggesting that the stock has transitioned from a bearish to bullish phase.
This structure also aligns with a cup and handle-like formation, providing further confirmation of a strong reversal.
Support Trendline:
The price has consistently respected a rising support trendline in the current phase of the rally, indicating bullish momentum.
Key Resistance Levels:
Selling Order Block: The stock is approaching a critical zone of supply between ₹195 and ₹250. This area corresponds to previous highs and is a strong resistance zone to watch for profit booking.
All-Time High: The ₹250 level remains a psychological barrier.
RSI Oscillator:
The Relative Strength Index (RSI) is shifting between bullish and bearish zones, currently climbing towards bullish levels, signaling potential continuation.
Volume and Price Action:
Volume is gradually increasing in recent weeks, confirming the breakout potential from the rounding bottom.
Trade Setup:
Entry: Look to accumulate near the current levels around ₹81–₹85, especially on dips along the support trendline.
Stop Loss: Place a stop loss below the recent support zone at ₹63 to protect against downside risk.
Target Levels:
1st Target: ₹195 (Selling order block).
2nd Target: ₹250 (All-time high).
Beyond ₹250: If the breakout sustains above the all-time high, the price could rally further into uncharted territory.
Risk-Reward Ratio:
The trade offers an excellent risk-to-reward ratio, with a potential upside to ₹195 and ₹250, compared to the limited downside risk to ₹63.
Technical Observations:
Rounding Bottom Formation:
The price action from 2014 to 2024 clearly outlines a massive rounding bottom, suggesting that the stock has transitioned from a bearish to bullish phase.
This structure also aligns with a cup and handle-like formation, providing further confirmation of a strong reversal.
Support Trendline:
The price has consistently respected a rising support trendline in the current phase of the rally, indicating bullish momentum.
Key Resistance Levels:
Selling Order Block: The stock is approaching a critical zone of supply between ₹195 and ₹250. This area corresponds to previous highs and is a strong resistance zone to watch for profit booking.
All-Time High: The ₹250 level remains a psychological barrier.
RSI Oscillator:
The Relative Strength Index (RSI) is shifting between bullish and bearish zones, currently climbing towards bullish levels, signaling potential continuation.
Volume and Price Action:
Volume is gradually increasing in recent weeks, confirming the breakout potential from the rounding bottom.
Trade Setup:
Entry: Look to accumulate near the current levels around ₹81–₹85, especially on dips along the support trendline.
Stop Loss: Place a stop loss below the recent support zone at ₹63 to protect against downside risk.
Target Levels:
1st Target: ₹195 (Selling order block).
2nd Target: ₹250 (All-time high).
Beyond ₹250: If the breakout sustains above the all-time high, the price could rally further into uncharted territory.
Risk-Reward Ratio:
The trade offers an excellent risk-to-reward ratio, with a potential upside to ₹195 and ₹250, compared to the limited downside risk to ₹63.
Disclaimer
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