3rd August - 10th August: Vedanta Swing Strategy
What's going on guys!?
Hope you all are keeping yourselves safe and minting money in the past month's bull run of the market.
Been quite some time since my last post, I hope I will be regular in with my future analysis for you moving forward.
I see a buying opportunity in Vedanta and in this post, I want to bring your attention to what I see as a fairly good Risk to reward setup in Vedanta Ltd .
Background:
1. The stock has been in news due to the delisting process. Vedanta's management on 29th July updated that they seek $ 3.25 billion loans to buy back the shares they don't hold. I interpret it as a sign of management's confidence in the business and hope that it will increase prices in the coming week.
2. Nifty metal has been bullish last week and we have seen it forming higher highs and higher lows. Analysis of the Nifty Metal index (on 4hr TF) shows that a breakout has happened at 2125 support line. Vedanta contributes to 5% in nifty Metal index so it gets another plus.
Stock Technical Analysis:
Analysis Type - Price action, Support & Resistance, Chart patterns, Market structure
1. Coming from steep bull run (as highlighted by the green Trendline), the prices consolidated inside the box (Range highlighted by the grey box) and it appears that the prices are about to try to break this range and going to exit from the box after forming an important market structure near the boundary (highlighted by the purple color support line).
2. Even inside the box, the trend remained positive and the bulls have continued to push the prices up making Higher highs and higher lows (indicated by blue color trendline).
3. The stock tested resistance in the form of the upper boundary of this grey box by giving a false breakout (marked by higher high 3) but had strong wich rejection which means the sellers are present at the boundary of the grey box. Post this the prices consolidated between 110 to 112 range for two days and with this consolidation formed another market structure. This first breakout also filled the previous gap.
4. Another thing to note - If we join the 1 hr wicks in the form of the yellow line, we see an intermediary pullback in prices a recent breakout followed by the testing of the yellow line (Some traders can also see teh formation in this reason as a cup and handle)
I see these as good enough evidence to take a buy trade with stop loss place right below the market structure.
How to trade
Let's talk about Entry, Exit, Target and Stop loss for this trade
I am waiting for a clear direction from the market at the start of first week of August to plan on many of these 4 pointers.
Still going ahead with what I anticipate to give me more ideas around how I will decide on Entry, Exit, target and Stop loss -
Entry - Will wait patiently for the next 3-4 candles to decide on Entry. I am anticipating a pullback to 112.2 levels at which I will enter the trade. If the candles are strongly bearish then I won't enter the trade at 112 levels and will wait for future indications of bulls in the market.
Target - Previous HH3 (118) looks like an easily achievable target as per the current market structure. Taken a target of 118.75 to ensure 2:1 Risk to Reward trade.
Exit - As the future market structure is going to form after entering the trade we can decide on if to hold patiently till the target of exit any instant. (Keep following this post.. I will be updating the analysis in the future)
Stop loss - Placed the stop loss below the market structure which was previously respected.
That's all traders for now. Hope you like the analysis and appreciate my effort.
Let me know what u think in the comments below
Like this post to show ur encouragement.
1 like = 1000 encouragements
Will keep on updating this page as the time progresses.
Hope you all are keeping yourselves safe and minting money in the past month's bull run of the market.
Been quite some time since my last post, I hope I will be regular in with my future analysis for you moving forward.
I see a buying opportunity in Vedanta and in this post, I want to bring your attention to what I see as a fairly good Risk to reward setup in Vedanta Ltd .
Background:
1. The stock has been in news due to the delisting process. Vedanta's management on 29th July updated that they seek $ 3.25 billion loans to buy back the shares they don't hold. I interpret it as a sign of management's confidence in the business and hope that it will increase prices in the coming week.
2. Nifty metal has been bullish last week and we have seen it forming higher highs and higher lows. Analysis of the Nifty Metal index (on 4hr TF) shows that a breakout has happened at 2125 support line. Vedanta contributes to 5% in nifty Metal index so it gets another plus.
Stock Technical Analysis:
Analysis Type - Price action, Support & Resistance, Chart patterns, Market structure
1. Coming from steep bull run (as highlighted by the green Trendline), the prices consolidated inside the box (Range highlighted by the grey box) and it appears that the prices are about to try to break this range and going to exit from the box after forming an important market structure near the boundary (highlighted by the purple color support line).
2. Even inside the box, the trend remained positive and the bulls have continued to push the prices up making Higher highs and higher lows (indicated by blue color trendline).
3. The stock tested resistance in the form of the upper boundary of this grey box by giving a false breakout (marked by higher high 3) but had strong wich rejection which means the sellers are present at the boundary of the grey box. Post this the prices consolidated between 110 to 112 range for two days and with this consolidation formed another market structure. This first breakout also filled the previous gap.
4. Another thing to note - If we join the 1 hr wicks in the form of the yellow line, we see an intermediary pullback in prices a recent breakout followed by the testing of the yellow line (Some traders can also see teh formation in this reason as a cup and handle)
I see these as good enough evidence to take a buy trade with stop loss place right below the market structure.
How to trade
Let's talk about Entry, Exit, Target and Stop loss for this trade
I am waiting for a clear direction from the market at the start of first week of August to plan on many of these 4 pointers.
Still going ahead with what I anticipate to give me more ideas around how I will decide on Entry, Exit, target and Stop loss -
Entry - Will wait patiently for the next 3-4 candles to decide on Entry. I am anticipating a pullback to 112.2 levels at which I will enter the trade. If the candles are strongly bearish then I won't enter the trade at 112 levels and will wait for future indications of bulls in the market.
Target - Previous HH3 (118) looks like an easily achievable target as per the current market structure. Taken a target of 118.75 to ensure 2:1 Risk to Reward trade.
Exit - As the future market structure is going to form after entering the trade we can decide on if to hold patiently till the target of exit any instant. (Keep following this post.. I will be updating the analysis in the future)
Stop loss - Placed the stop loss below the market structure which was previously respected.
That's all traders for now. Hope you like the analysis and appreciate my effort.
Let me know what u think in the comments below
Like this post to show ur encouragement.
1 like = 1000 encouragements
Will keep on updating this page as the time progresses.
Trade active:
Entered vedanta at 113.65 On retracement. Market opened with bulls pushing the price up. Trailed SL to 110
We now don't have any risk in this trade.
Updated the target to target 2 - 121.6