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Oversold

Hindalco: Play For BounceAlthough I presented the trade on weekly chart yet it would be small swing trade which may take just few days to either hit the targets or stop loss. Partial or full profit booking at first target could be done as overhead supply may hurt the upmove. Some might disagree with my Cypher pattern so I urge them in advance to take it easy :) All nitty gritty details are mentioned on the chart itself. The stock is highly volatile so risk averse traders may opt to stay out of this trade. As per my setup Risk to Reward is not exactly 1:1. So those who want exactly 1:1 may wait for pullback to 215.50 but only after hitting the 217 entry . All the best for the week ahead. Regards
NSE:HINDALCOLong
by Bravetotrade
Stochastic: Oscillate the Right Way – A study of SBIDeveloped by George Lane in 1950 – Stochastic (SO) is a momentum oscillator, that is, it follows the momentum of price. Its value oscillates between 0 to 100. The general interpretation of SO is that stock is overbought when SO value is above 80 and oversold below 20. But to what extent this interpretation is correct? Let’s find out. I am taking State Bank's weekly chart (random pick) 2013 onwards. Although the study is applicable to all time frames yet it is more reliable on larger timeframes. The smaller timeframes can always be used for better entries and exits. I am taking only %D line which is 3 period MA of %K (not showing here on SO chart) which represents the current value of SO. The reason for choosing %D is that it is smooth and less noisy. A cross of %K over %D is used as buy and sell signals. But a lot of false signals are generated through this system as it noisy in case of volatile stocks, so I am ignoring this system in this study. Overbought Zones and Rallies Let’s first concentrate on points where SO cross above 80 Point C: Stock rallied 57% Point E: Stock rallied 20% Point I: Stock rallied 29% Point K: Stock rallied 7% Oversold Zones and Falls Now concentrate on points where SO value crossed below 20 Point a: Stock fell -25% Point c: Stock fell -9% Points e,f: Stock almost flat Point g: Stock fell -11% Point h: Stock fell -33% So is it a good practice to sell a stock because SO is above 80? Absolutely not, rather when SO value crosses 80 a buy should be triggered because stock is in bullish momentum. Same is true for SO cross below 20, it generates sell signal. Divergence and Price oscillation: Another Interpretation Another interpretation of SO is through Divergence. Means when price is making higher peaks but SO is making lower peaks or stock making lower troughs and SO making higher troughs. Between points b and d: huge divergence on SO, Price flat at D1; rally 93% At F: Divergence with rising price (D2); initial fall 23%, total fall 55% At i: Divergence with price fall (D3); rally 80% At J: Divergence(red line) with price rise (D4), fall 16% but SO didn’t touch 20 this time, while it did in above 3 cases At L: Divergence(red line) with price rise (D5); Fall so far 10% So will it be right to trust divergence? Absolutely, as it is followed by massive price movement. But will be right to trust only divergence for buy or sell? Absolutely not, it should always be used in conjunction with other price action signals. And now the big question, what is the present scenario in this chart? Look at the divergence on SO (thick yellow line) and the price movement of the stock and interpret yourself. Play safe, stay healthy and like if u can.
NSE:SBINEducation
by Bravetotrade
10
Classical trade using Trendline, Channel & EngulfingThe stock is getting support at up sloping trend line. Probably we can use this pull back for entering a long at this level. My idea has following justification 1. closed out of downtrend regression channel 2.Made an engulfing covering the previous candle completely. 3. Trend line support. 4. Mostly at this level of RSI it changes the trend. 5. Trend reversal entry on 1st bar offers a good Risk to reward ratio. I would take entry on Tuesday and see how it works.
NSE:BAJAJ_AUTOLong
by praveen.bhatiya