Price action screaming buy!! Or is it as simple as it looks?If we go by the textbook definition of a falling wedge pattern, the price consolidates between two downward sloping & converging lines forming a wedge shape. (Not as difficult as it sounds, just looks at the chart).
As per a common understanding of this pattern, the price continues higher after a breakout to the upside.
Price action in LIC Housing finance shows a nice breakout of the falling wedge pattern.
The price broke out with a strong candle and above-average volumes.
This is a perfect condition for a buy trade.
But wait, This is not the complete technical picture. Keep reading
We recently saw how a bullish Inverse head & shoulder pattern failed in HDFC, even though it had a perfect breakout condition, Positive news about the merger and almost all ideas on trading view were out rightly bullish. (Check HDFC idea in my profile, neutral and saved myself from loss)
If it were as simple as identifying a pattern and taking a trade, everyone would be making profits in the market.
Back to LIC Housing Finance:
Along with the falling wedge, there are other technical factors.
Two important levels to watch are the 200 days moving average, and the Horizontal S&R line at 389.25.
The price has taken support or resistance at this line multiple times in the past.
Let’s look at the positives first:
• Perfect falling wedge pattern & breakout with a strong candle and good volumes.
• MACD trending higher and in positive territory. RSI Strong, and other indicators in the positive territory.
• Price finished its correction exactly at 61.8% Fibonacci ratio with Price RSI positive divergence before the correction ended.
Now the Caution Signals:
• Price trading below Strong resistance line at 389.25 and struggling to cross above.
• Price below 200 days moving average (a strong resistance level). 200DMA currently trading at @400.
• Whole numbers are considered psychological S&R levels and 400 is a psychological level.
• Fibonacci 38.20% level @ 405.60 may act as minor resistance.
Combining these points, we get a strong resistance zone between 389 to 400 and minor resistance at 405.
A breakout above the wedge pattern is the first signal. The price has to breakout above the resistance zone.
If the breakout happens, wait for the price to retest 200dma or Horizontal line @ 389, whichever is higher at the time.
I give more weightage to Horizontal S&R lines because these are the points where most buyers/sellers are concentrated.
200DMA is definitely a strong resistance and there will be many sellers at this level.
I’m cautiously bullish on this stock.
The best way to avoid failure is to wait for the price to give us a confirmation.
I will be following the price movement closely and update this idea when I get a buy/sell signal. So follow me and stay tuned for the next update.
Post your comments. Let’s have a discussion.
Happy trading.
Co-Authors:
in.tradingview.com
in.tradingview.com
Disclaimer:
This is not buy/sell advice. Please do your due diligence before making any trading decision or consult your financial advisor.
Sharing my analysis and thoughts for a stronger and healthier community. Cheers
Indianstocks
Developing Technical & Fundamental outlook on HDFC, BUY or SELL?After the news of HDFC’s duo merger, the Market cheered and the price shot up. Now it’s back to the breakout point after the huge rise.
Is it a good level to buy?
Let's get into the Technical outlook first, then, we will explore the fundamental view of the merged entity.
Technical Outlook:
Bullish signals
• Inverse Head & Shoulder pattern formation
• Breakout of neckline & Retest
Bearish Signals
• Price could not sustain breakout of Major Resistance @ 2506 & trading below Psychological level @ 2500.
• Indicators showing weakness.
The chart has formed an Inverse Head & shoulder pattern.
This pattern is considered a continuation pattern and a breakout above the neckline is a bullish signal.
The Gap up and volume spike was due to the HDFC duo merger news.
Price is back at the breakout level and retesting the neckline support.
One key thing to notice on the chart is the Major S&R line at 2506. The price could not sustain above this level and currently trading below the psychological level of 2500.
Overall Technical outlook – Neutral, Wait for buy/sell signal
For Intraday/ Swing Trade purpose:
Two important levels are - Horizontal Resistance at 2506 & the Neckline Support at 2435.
If the price breaks down below 2435:
Sell at the next red candle or at the retest of breakdown near 2435.
SL - above the Major Resistance 2506.
If the price breaks out above 2506:
Buy at the next green candle or at the retest of breakout near 2506.
SL - Below Neckline support 2435
Target/ Exit Level – Trailing SL
We'll get correct levels only when the breakout happens under suitable conditions. There are multiple possibilities. The price may go up, down, or sideways.
--------------------------------------
Fundamental Outlook:
The HDFC duo has a track record of good business practices and customer service.
The future looks promising for the merged entity.
Reason?
Home Loans are secured loans as the house is kept as collateral.
Banks love this segment as they have the benefit of cash deposits which are available at lower rates, and they can offer cheaper home loans than NBFCs.
But HDFC Bank could not aggressively participate. All they did was assign these home loans to HDFC for a small fee.
Why do you ask? Because they would be directly competing with HDFC if they did.
The merged entity will have the benefit of:
1) Cash deposits at significantly lower rates which will help offer cheaper loans
2) The customer base of HDFC bank
3) HDFC Bank will have the freedom to aggressively sell these loans.
Key Risks:
HDFC Bank has always played safe by keeping a lower concentration of loans in the higher-risk segments. It even survived the collapse of debt-ridden infrastructure companies in the 2000s.
It seems that this strategy is changing. This press release says:
www.hdfcbank.com
A lot of mergers don’t work as expected. There could be many reasons for this to happen.
Regulatory issues, Systematic problems, market conditions.
Although the business outlook is strong, what matters more for intraday/ swing trade is the technical figures on the price chart.
I will be following the price movement closely and take a trade when I get a signal.
I will also post it here, so follow me and stay tuned for the next update.
Post your comments. Let’s have a discussion.
Happy trading. 😊
Co-Authors:
in.tradingview.com
in.tradingview.com
Disclaimer:
This is not buy/sell advice. Please do your due diligence before making any trading decision or consult your financial advisor.
Sharing my analysis and thoughts for a stronger and healthier community. Cheers
MOTHERSON SUMI SYS - CONSOLIDATION NSE:MOTHERSUMI Motherson sumi consolidating in Ascending triangle after resistance breakout
Consolidation resistance is horizontal and support is rising
Above 140 it can trigger bullish sentiment.
Important levels are marked on chart.
Happy Trading!
A Comprehensive Guide to Rectangle Formation.Introduction:
Price trends do not usually reverse on a dime. uptrend and downtrend are typically separated by a transitional period or trading range, and trading range formation signal trading opportunities for traders.
The trading range separating rising and falling price trends discussed here
is a pattern known as a rectangle.
This post will cover these questions:
1. Types of a trend reversal.
2. Rectangle formation.
3. consolidation rectangles.
4. Significance of a rectangle pattern.
5. Retracement moves
6. What when a rectangle fails?
1.Trend reversal
The turning point between the bull and bear phases is termed a reversal pattern.
# Reversal patterns at market tops are known as distribution because the security is said to be “distributed” from strong, informed participants to weak, uninformed ones.
# Price patterns, including rectangles, that develop at market bottoms are
called accumulation formations where the security passes from weak, uninformed participants to strong, informed ones.
a.Horizontal or transitional reversal.
An oil tanker takes a long time to slow down and then go into reverse. The same is normally
true of financial markets. Generally speaking, the longer the trend, the more
time spent in the reversal (turnaround) process. This transitional or horizontal phase has great significance
because it is the demarcation between a rising and a falling trend.
b. Reversal on a dime without warning.
This type of reversal is the exception to transitional reversal and they are the highly emotional market that changes without warning.
2. Rectangle formation.
The figure shows the price action at the end of a long rising trend. price starts to move in a trading range between Point A and Point B.
Point A can be identified as a resistance area after the price backed of two times from Point A.
Point B can be identified as a support area after the price moved up two times from Point B.
one can draw horizontal trendlines or Box on the chart to mark the level.
At this point, the demand/supply relationship comes into balance in favour of the sellers whenever the price
reaches A, and the demand/supply relationship comes into balance in favour of the buyers when the price reaches B.
Finally, prices fall below point B signals a trend reversal and the sellers are dominating the market.
3. consolidation rectangles.
If the rectangle following an uptrend is completed with a victory for the buyers as the price pushes through the upper line A , a reversal does not develop because the breakout above A reaffirms the underlying trend. In this case, the corrective phase (trading range) associated with the formation of the
rectangle temporarily interrupts the bull market and becomes a consolidation pattern.
In the figure, a breakout to the upside makes this pattern a continuation rectangle.
#the prevailing trend is in existence until it is proved to have been reversed.
4. Significance of a rectangle pattern.
i. Time Frames
The longer the time frame, the more significant the pattern. A pattern that
shows up on a monthly chart is likely to be far more significant than one
on an intraday chart, and so forth.
the longer a pattern takes to develop in a particular time frame, the greater its significance within that
time frame.
# Most of the time the larger pattern will be more important, but not every time. In technical analysis, we are dealing in probabilities, never certainties.
ii.Volume Considerations.
volume is an important independent variable that can help us obtain a more accurate reflection of crowd psychology. volume shrinks during the formation of pattern and blastoff on successful breakout/breakdown of the price.
iii. Measuring implications:
The depth of the pattern is projected in the direction of the breakout from the breakout point
5. Retracement moves.
Many times when the price breaks out from the rectangle, the initial move is followed by a corrective move back to the breakout point. This is known as a retracement move, and it offers an additional entry point for left out players who pushes the prices again in the breakout direction.
6. What when a rectangle fails?
One of the first things that should be done upon entering any business venture is to weigh the possible risk against the potential reward. the same is true in the financial markets.
*Amatures on breakout only focuses on potential profits.
*Professionals always consider the risk as an equal.
this means when opening a new position you have to consider the risk to reward ratio and decide prior to opening the position what type of price action would cause you to conclude that the breakout was a whipsaw.
Some price action to consider to identify a whipsaw (fake breakout).
a.50% rule.
It very much depends on the chart. If there are no obvious support points, many traders believe that a penetration of the 50 percent mark is the place to exit. In this case, the 50 percent mark is the central point between the two horizontal lines that make up the rectangle.
b. Trendline support
using price action trendline to identify if the trend is valid or has been breached.
c. Stop below/above the opposite line of breakout/breakdown.
one can set a stop above the resistance line if the short-sell position is triggered.
or set a stop below the support line if the long position is triggered.
d. False breakouts:
Shrinking volume on an upside/downside breakout.
Hope you found this helpful and I sincerely hope you find a ton of good rectangle formations to trade-in!
Happy Trading!
Will BPCL follow the Symmetrical Triangle Pattern?BPCL, one of the highest dividend payout stocks, forms the symmetrical triangle. The stock taking support at the monthly trendline with higher volumes compared to the last month. Oil price increase may be one of the reason behind this. Let's see whether it respects the trendline or not. What's your thought on this?
Live Challenging Stock Market Analysis Buy IIFLSEC @ 72.70Live Challenging Stock Market Analysis Buy IIFLSEC @ 72.70
Target1 @ 90.50
Buy2 @ 67.65
Target 1&2 @ 133.85
#stockmarket #IIFLSEC #sharemarket
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Forex Tamil
Expecting some consolidation and ranging around 16500Oil price and US Treasury bond yield are rising and there is not much positive news related to peace talk coming from Russia and Ukraine. So there are chances for some kind of consolidation around the current levels. If a crash happens, like the previous 2 times, when a bearish engulfing candle formation was seen, then 16500 will be a crucial level to watch out for.
I am expecting some stock-specific moves even if the index ranges. So exiting ETFs positions and moving into stock-specific swing entries.
If 16500 is broken with momentum then I will be bearish. Until then I expect the market to range and rally as soon as some positive news kicks in.
HAL - Triangle Breakout but still within Box!After accumulating within a Darvas Box since August 2021 and a further Triangle since October 2021, Hindustan Aeronautics has given a breakout of the Triangle which is also currently being re-tested.
HAL is fundamentally a strong play for the long-run. On the technical side, riskier traders may enter on this Triangle re-test at CMP and hold for breakout of the rectangle as well. Safer traders may consider entering upon breakout of the rectangle (above 1490).
DABUR - Parallel Channel + Superguppy BreakoutDabur has broken up above the descending parallel channel it has been trapped in since September 2021, while also closing above the SuperGuppy resistance. There is also divergence in the RSI and price line. These are bullish signs.
Watch for it to hold 560 levels over the next few sessions and look to purchase above 570 for targets of 585 and 600 in the medium term.
Nestlé India NSE 17/03/2022There exist regular bullish divergence between MCAD and price which is the sign of trend reversal and most probably price appreciates to the 2 defined targets.
There are chances that the price touches the 61.8% of Fibonacci retirement level even and then continues its bearish cycle.
The overall script sentiment is bearish as the entire markets are falling yet there are some chances of some appreciations befor the fall roll out
A faster recovery and deeper crash is on the cardsAlthough I do expect that a faster recovery is possible in Nifty, this will be due to the cheaper valuation and the retailer capital flowing into the market. But the global economic scenarios and fundamentals are not that positive. Given the situations and economic impact due to the ongoing war and also the rising inflation, there is a high probability that the institutions will consider selling into the market even the market rises.
So ultimately I do believe that the retailers will be trapped at the top of the market around the 18K levels.
Will be exiting my positions slowly and gradually as the market approaches the all-time highs depending on the price action and the market scenario at those moments.
Bank Nifty Trade Setup for 14th Mar30 Min time frame: Bank nifty Analysis
1. Bank nifty is trading in range of 34400 to 35000
2. Look for buy setup near 34400 level & short around 35000
3. If sustain above 35000 a clear up trend will come & below 34400 down trend will come
4. Always take volume & market confirmation
Disclaimer :
> This analysis is for educational purpose only.
> Keep an eye on global market as well, trade as per market condition.
Bullish view on TECHM (Tech Mahindra)TECHM's daily chart suggests that it has taken support at the same level as it has in the previous few days. Moreover, it has broken out of an upward channel and is testing it today with a gap down. Moreover, a look at the 14 day RSI suggests a bullish divergence taking place in the charts. If the price holds the upward channel and bounces off it, the price could go towards the next resistance zone at 1540 and further move to the 1680 levels.
Indian HotelsCurrently the stock has discounted 13% from all time high levels.
Indian Hotels (Daily):
1. Gave the closing above 20 Days Exponential Moving Average
2. Descending Triangle Breakout
3. Good volumes on Breakout
View Point:
1. Entry after Breakout Retesting
Addl Points:
1. FII/FPI have increased holdings from 13.48% to 15.19% in Dec 2021 qtr.
2. Mutual Funds have decreased holdings from 18.74% to 18.08% in Dec 2021 qtr
Notes:
1. The above analysis is just for educational purpose.
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NSE:SMARTLINK
Why SMARTLINK ?
{
After HUGE CORRECTION from it's high(AROUND 50%).
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LEVELS ARE GIVEN IN CHART !!!
TRIGGER PRICE :- 136
}
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