WAAREERTL VCP - The Concept and its formation
This is educational article to show how VCP , Volatility Contraction pattern development and its breakout .
The Volatility Contraction Pattern (VCP) is a technical chart pattern often used in share trading to identify stocks that are preparing for a breakout.
Here i used the stock WAAREE renewable Technologies as an example- This is not a buy sell recommendation - only for study purpose .
This stock corrected for almost 50 % from All-time high .
Phase reversal started from 07 August 2024.
I split the screen into two sections to explain the concept .
Left side screen
1. VCP-1 20% , VCP-2 11 % and VCP -3 6% - a clear Contraction in Volatility.
Right side screen
2. Steep reduction in volume - see yellow triangle
3. Lower High formation - see violet trendline
4. Volume profile 2.33 M /2.06M (buy/sell)from 7Aug to 12 Sep
5. See RSI bottom level lower high formation
And the result is 25% profit within 5 trading days
This is a classical example for VCP breakout .
I hope this concept will help us in identifying similar breakouts in other stocks -
Note : Both sections , i used the same candles from 7Aug to 12 Sep . Left side screen made little elongated to visualize VCP formation more clearly
disclaimer :This is not a buy sell recommendation - only for study purpose .
The Volatility Contraction Pattern (VCP) is a technical chart pattern often used in share trading to identify stocks that are preparing for a breakout.
Here i used the stock WAAREE renewable Technologies as an example- This is not a buy sell recommendation - only for study purpose .
This stock corrected for almost 50 % from All-time high .
Phase reversal started from 07 August 2024.
I split the screen into two sections to explain the concept .
Left side screen
1. VCP-1 20% , VCP-2 11 % and VCP -3 6% - a clear Contraction in Volatility.
Right side screen
2. Steep reduction in volume - see yellow triangle
3. Lower High formation - see violet trendline
4. Volume profile 2.33 M /2.06M (buy/sell)from 7Aug to 12 Sep
5. See RSI bottom level lower high formation
And the result is 25% profit within 5 trading days
This is a classical example for VCP breakout .
I hope this concept will help us in identifying similar breakouts in other stocks -
Note : Both sections , i used the same candles from 7Aug to 12 Sep . Left side screen made little elongated to visualize VCP formation more clearly
disclaimer :This is not a buy sell recommendation - only for study purpose .
Note
23/09/24- another 5 % increase today- total 30 %- upper circuit.
is this trend continues ?
see RSI 75 minute -
SMA value is almost near to RSI value .
see the impact of RSI cross down SMA on tomorrow / day after tomorrow
Note
for a healthy uptrend , pullbacks required .
so we can expect a pull back any time .
20 EMA is a good support level -
at least candle need support from 10 EMA.
If candle far away from 10 EMA , risk is high . possibility to to turn to LC
For easy understanding , EMA chart added .
see the chart period from DEC 2023 to May 2024 to see how 10 /20 EMA supported the stock price and the pull backs to 10 / 20 EMA
Note
for a healthy uptrend , pullbacks required .
so we can expect a pull back any time .
20 EMA is a good pull back level -
at least candle need pull back to 10 EMA to maintain healthy uptrend
If candle far away from 10 EMA , risk of sudden fall is high
For easy understanding , EMA chart added .
see the chart period from DEC 2023 to May 2024 to see how 10 /20 EMA supported the stock price and the pull backs to 10 / 20 EMA
Note
out of last three days - 2days LC and today UC
pullback to 10 EMA in LC days
since stock have strong momentum (RSI above 65) took support between EMA 10 and EMA 20
(DTF)
in 4Hour chart - support exactly from 20EMA
you can check 75 minute chart support from 50EMA
Note
Note
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