Hero of 2007 - Reliance Industries

Reliance Industries was one of the biggest leader on 2006-07 Rally. After 2008, Reliance stuck in range and become trader's stock for last 6-7 years.

Following are the long term charts of Reliance:

Clearly Range for Reliance is keep on decreasing and soon we will see breakout followed by big trending move. Announcement of Reliance Jio is also one major news which is just around the corner.

On Downside, just near support. Breaking 800-830 area will take the stock back to 670-80 levels which might not happen.

On technical side, buy will be triggered once 1050 current trend line which will keep on decreasing with time.

Right now, the spring is getting stretched and move will come once its released.


Now , Lets add a Fibonacci retracement view as well, just to cover how Reliance respected Fibo ratios :

  Clearly , it seems Reliance is also respecting Fibo ratios :):

• Straight recovery till 61.8 %
• Remain in range between 38.2 and 61.8% for 1.5 years.
• New Range between 23.6 to 38.2 for next 2 years.
• Recent fall from 50%.

So from above conclusions , 690-740 is very good range to accumulate Reliance. It may also happen that these levels may not come in that case, buy above breakout just before Run-away with the help of Technicals/Charts :).

Note: Above post is shared only for learning purpose. This is not some BUY/SELL tip.

One can comment if want technical views on some particular stock.

Nifty And Fibonacci

Lets study now how Nifty reacted recently on Fibonacci ratios.

   Time taken for Analysis : Oct 2014 to Jun 2015

    Nifty rallied from 7720 odd levels to 9119 and started corrected after that.

• 23% ratio was broken easily. 
• Nifty found support at 38% rallied till 23% and again fell.
• No Support at 50%
• Support at Golden Ratio 61.8% which made Nifty rally till 23%.
• Again fell till 78.6% and recovery till 50%.
• Again fell and recovery till 38% now.

    So, clearly somehow fibonacci ratios are respected. Once we can understand power of fibonacci then we can trade once these levels are respected for next level in same direction.

     Now Lets Analyse Current fall and check why 8050-60 zone was resistance for Nifty :

   

       In current fall, Nifty fell from 8060 levels and following were the resistances:

• 50% Retracement at 8064 levels
• Previous tops at 8050-8080 range.
• Gap above 8080 range.

      More the number of resistances more risk rewarding trade becomes. Nifty has already seen 250+ points fall from that level.

      Now , Lets Analyse long term Nifty movement with Fibonacci and how trend line and Fibonacci can be used to predict moves:

    Following are the observations from above chart:

• Nifty respected 23.6% and gave small pullback.
• Made Double bottom at 7890 (38% retracement) and rally till top of trendline.
• Made one more bottom near 50% retracement and gave sharp pullback. Also tested bottom trendline.

       So when we combine multiple indicators probability of move also increases.

       So from above chart 7515 or 7480-7530 becomes major support zone for Nifty and if Nifty sees these levels post RBI policy, This can be a golden opportunity to take longs both from trading and investment prospectus. Moreover if 7480 is broken then next level  is 61.8% which is 7139 which will be very very quick. 

       Moreover, if Nifty break 8060 on Upperside then we can see smooth rally till 8250 zones.

NOTE: Above charts are shared for learning purpose only and its not a BUY/SELL call/tip.

    

Nifty View

In our last view, we told that Nifty may test 8000 area if 7850 taken out. Nifty tested 8050 region and then corrected till 7717.

Now moving forward, Nifty is still in down-trend channel which started 6 months back. From here, next move will only come of Nifty closes above 8060 which will give a nice Cup and Handle breakout otherwise Nifty can test trend-line low again which will be range 7400-7500.

    Nifty is currently in no trade zone. Wait and let Nifty give directions :)

NOTE: Above view is presented only for education purpose and this is not any BUY/SELL recommendation.

Importance of Fibonacci Retracements

Fibonacci Ratios have very important role in technical analysis. It has been generally seen that charts generally respect these ratios. History has revealed that these ratios have certain impacts on price action. The rise and fall does not move in straight line but up down movements are some of retracements only.

One can Refer wiki for how these values are calculated:
https://en.wikipedia.org/wiki/Fibonacci_retracement

Following are Fibbonacci ratios normally used:
23.6 %  - Minimum Re-tracement
38.2 % - General Re-tracement
50 %
61.8% - Golden Ratio. Most common in big moves
78.6% - Some time golden extended to 78.6
100%

Let have look at following chart of SBI. Below chart is last 8 years chart of SBI where multiple up-down moves are seen.

    We have here considered the SBI move from 2009 to 2014. SBI rallied from 88.4 to 352 in two years. Started correction from 352. Now lets check what it did at each fibonnaci retracements.

• 23.6 was straight away broken, In bigger time frame waves this ratio is generally not repected.
• 38.2 was respected but now 23.6 became resistance which resulted finally to break 38.2 as well.
• 50 % was again respected and move till 38.2 was seen but that resistance was not broken.
• 61.8 % in first attempt broken but after that it acts as a support as well but since it was broken initially so ultimately it was broken with 38.2 as major resistance.
• Final support at 78.6 with double bottom and double top at 61.8 finally this downmove ended.

Now lets see current down move in SBI along with Fibonacci retracements:

   In current down move , so far bottom has been formed near 61.8 Fibonacci , if this low is not taken out then fresh upmove can start but its not necessary. We can observe similar patterns here as well like how price behaves at various fibonacci ratios.

We can apply Fibonacci ratios to any chart and can see magic of values. Sometimes these are also called magical numbers. SBI chart was taken a random chart to demonstrate importance of these ratios.

NOTE: The above chart was only for learning purpose and not some buy/sell tip.

Bullish Pattern : Cup and Handle (Alpa Labs)

Today we will discuss regarding one of the most successful pattern named Cup and Handle Pattern. The pattern is in the shape of a large cup followed by a small handle which is similar to U shape where the initial fall and recovery is very fast.

These patterns are successful when top of CUP is crossed with full force along with good volumes. Sometimes the neckline is retested but sometime smooth move is seen.

Lets look at one of the example:

ALPA LAB:

 Here, we can see the stock first formed a CUP in almost 4 years, followed by a handle in next 7-8 months. It just gave a breakout in quick time span. So here if stock break 21 21.5 on lower side then it can be a failure otherwise stock is ready to catch up.

In Cup and Handle pattern we have two targets.
Target 1 is Size of Handle (10 rs in this case)
Target 2 is Size of Cup (14 rs in this case)

Risk reward entry here is good and any pullback to 22-23 can be traded.

Note: The above chart is presented for learning purpose only. This is not a trading or buy/sell tip. So your own research for stock.

Waves and Stock Price [JK Tyre and Gruh Finance]

Lets Discuss today something on waves. The share prices generally moves in waves. Impulsive waves are quick in direction of trend while others are complex where price remains in some definite range before decisive directional move.

During complex/consolidation waves, we need to check whether there is accumulation or distribution. This thing is not straight forward so best is to react when trend line breaks in either direction.

Lets have look at examples of such moves:

GRUH FINANCE:

 Starting from Trending move, the wave started first correction for few months followed by breakout to start first impulsive move in the direction of trend. Made high of 320+ in JAN '15 and again in consolidation phase. Did smaller wave breakout and did some move. Again on the verge of breakout. This can be start of new wave if price sustains.


JK Tyre:

JK Tyre is also in consolidation from last 8-9 months with some negative bias. A rise in volume was seen in last upside and now price range narrowing before break out or break down. One can keep close eye to find which direction it goes.


Note : The above charts are shared for learning purpose and not for any buying/selling recommendation.

Defensive Picks OBC and Vimta Labs

OBC

    OBC is looking very attractive at current valuations with Price/Book ratio of .29. On Charts, it is testing its 8 year trendline. If able to cross again then it can be a good buy to again retest its falling resistance. It is also a good dividend paying bank which is good for portfolio. Just wait for signal :)

OBC

Vimta Labs

Vimta Labs

          Vimta labs has seen a good run up in last 2-3 years. Its retesting previous breakout again. A good entry as per charts can be taken as Risk Reward ratio favours here.


NOTE: Above charts are shared for learning purpose only. This is not any buying/selling tip. Take your investment decisions after doing research yourself.

Learning with charts

 This is my first post on this blog. Here we will discuss and learn how charts study can help us taking decisive actions while trading/investing.

Panic has not bottom, may be we have already witnessed a bottom in Nifty at sub 7550 levels or we might see some pull-back but its great time to accumulate quality stocks.

In coming future I will share few good short and long term opportunities in this blog. Stay tuned for updates.

Let me start with first Recommendation :

DCB

Disclaimer : The above views are shared only for Education purpose. This is not buying/selling tip.

Stay tuned for more learning :)