Maruti ... Will the breaks fail for short term ?

Hello all ...

Herein I share my observations on the daily chart of Maruti. Again, due to multiple observations, the chart may look clumsy. Kindly read the theory alongside the chart. 

Pattern formation:
Stock is in consolidation since 24th March. This consolidation seems more like a symmetrical triangle. Breakout of the symmetrical triangle is at 5160 zone. 

Waves:
Not highlighting the details, but as per the hourly chart, the stock seems to be formating zigzag formation as per wave counts (with extended wave b). The Stock seems to be heading for wave C (impulse). 

Candlestick Pattern:
The last 3 trading sessions were pretty strong for the counter. Everyday closing was clearly higher than opening. Not exactly textbook replica, but still formation is more like three white soldiers. This pattern supports bullishness.

Fibonacci: 
Reverse retracement is taken from the top of 7230 to the bottom of 4000. The stock reached till 50% in the recent past and presently it's halting right at 38.2%, which is at 5228. This zone is coinciding with the symmetrical triangle breakout zone. On breakout, one can expect higher retracement levels to be achieved. (kindly note that importance is given to zone, rather than absolute number)

Ichimoku Clouds:
On 28th January, the counter fell below Ichimoku Cloud. Since then, it couldn't really surpass the clouds, and clouds became resistance area. It tried entering the cloud zone on 13th May, but couldn't sustain it. Successful closing came on 21st May inside the cloud. Follow-through buying was also seen. This is a positive sign as per the indicator. Doors are open till 5620. 

50 EMA:
Since breakdown during the end of January, 50 EMA on the daily chart is working well as resistance. The stock tried crossing it several times, but unable to do so. Presently, 50 EMA is placed right at 5240. This level is again in the same vicinity. 

RSI: During this entire consolidation zone, the RSI is gathering momentum. Kindly note that this is very common during the consolidation phase. The positive side of this is that the RSI is placed at 54.60, which is showing a good strength and any directional rally may gain decent strength. 

DMI: 
DI Lines are in consolidation mode, hovering near 25 mark. ADX line is at the extreme bottom. Any directional trade, when emerges, will likely be decent in magnitude. 

Volume:
Healthy volumes are seen in this entire consolidation phase. As this consolidation is at the lower end of the chart, calling this volume as accumulation volume would be fair. Though, confirmation will be on breakout/breakdown. 

Observation:
Today (26th May), the stock has managed to open with Gap. This gap-up opening has helped the counter to deliver breakout on the symmetrical triangle. This seems a very strong sign, provided closing turns decent. 

Putting it all together, symmetrical triangle breakout, Corrective wave formation, Ichimoku Cloud levels, 50 EMA & Fibonacci retracement, all levels are in the vicinity of 5200-5240. Strong RSI, stable DMI, healthy volumes, and bullish candlestick pattern formation are supporting a bullish view. 

Keeping the risk-reward ratio and own temperament in mind, one can initiate bullish trade.

- Kunal Rambhia

Grasim ... conglomerate accumulating strength !

Hello all,

Herein I share my observations on Grasim industries on daily chart! Due to multiple observations, the chart may look a bit clumsy, but try to study the chart alongside explanation.

Formation: 
After a healthy fall from 830 odd zone till 390 zone, counter is in sideways consolidation with positive bias. This consolidation seems like a symmetrical triangle of which, breakout remains pending. The resistance line is placed at around 540. The last leg of formation can also be seen as inverse head & shoulder. Neckline is placed at same level of the resistance line of symmetrical triangle formation. 

Ichimoku Clouds:
In today's trading session (20th May), the counter has managed to enter the cloud zone, levels being 515, sustaining in the zone would open doors till higher zone of cloud, placed near 600 zone. 

Moving Average:
50 periods EMA is placed right near the resistance line of the symmetrical triangle. This may act as a resistance for time-being, but may act as role reversal support, once crossed. 

Candlestick formation:
Yesterday's trading candle seems like a bullish harami pattern (though not exactly as per definition). (Certainly not sufficient to trade as it's within the symmetrical triangle formation, but definitely supporting any bullish formation)

Fibonacci:
Extension levels are highlighted using blue color on the right side of the chart. On symmetrical triangle breakout, we can expect the counter to reach 'at least' 100% of the first wave, which is placed in the vicinity of 650. 

Fibonacci: 
If reverse retracement is taken right from the top of 840 to the bottom of 390, 61.8% level turns up at 665, which is coinciding with the extension level. 

RSI:
RSI indicator is firmly placed at 52.50, which may support any kind of emerging trend.

Volume: 
Higher activity is seen in present consolidation compared to the previous fall. This may just be because of the thrust to accumulate quality stock at a decent valuation. This is certainly a neutral indicator as of now. But it can definitely support trend going forward. 

Wave:
Not explaining in detail, but it seems flat correction is underway. Wave A (ABC) and wave B (ABC) are done. Impulse may emerge soon. 

Putting all together, the pattern breakout and EMA crossover remains pending (540 zone) as of now. But Ichimoku cloud and wave emergence, along with strong RSI and candlestick formation is supporting early entry too. 

Strategy:
The covered call strategy seems perfect as of now. One can initiate long position with short on call. 8 trading sessions are remaining to expiry. One can earn time decay too. 

Keeping the risk-reward ratio and own temperament in mind, one can initiate trade. 

- Kunal Rambhia

ICICI Pru Life ... Will it provide insurance or will need insurance ?

Hello all, 

Here is a small write up on formations of ICICI Prudential Life Insurance. I have evaluated only daily timeframe chart. Let's see the observations. 

Formation:

After recent massive fall, stock managed to rally from bottom of 226 to approximately 416. In this recent bounce, stock is forming Rising Wedge where every successive bounce is smaller in magnitude compared to previous bounce from support zone. 

Formation:
Stock made high of 416 zone on 30th April. After making bottom at 371, it again bounced to make high at 413 yesterday (8th May). Almost similar tops may show double tops formation. 

Formation:

8th May candle seems like Shooting star candlestick formation, which signifies pause for time-being. As per pattern, downtrend will be confirmed only on follow up bearish candle. 

Fibonacci:
On reverse retracement front, the recent bounce has halted right at golden ratio of 61.8% (retracement is taken from the top of 534 to the bottom of 226). 

EMA:
Also 200 period EMA (giving more importance to recent formation) is placed at 419. This seems to be acting as resistance.

RSI:
RSI is placed at 56, which seems to be holding strength till now. But minor negative divergence is seen. This has importance in conjunction with many other observations.

Putting it all together, Rising wedge formation with possible double tops and shooting star on candlestick formation along with resistance of 61.8% fibonacci ratio with 200 EMA and minor RSI bearish divergence, ALL confirms possible trend reversal. 

Levels to watch out for:
Strong Resistance zone: 420
Support zone: 380

Trading Strategy: As stock seems to be taking pause, there is no firm confirmation of trend reversal. One shall think of selling OTM calls till trendline is taken out on lower side. On breakdown, one can initiate trending position with futures. 

- Kunal Rambhia

Sail ... Metals showing Strength !

Hello All, 
here is a small write up on sail. I have analysed two timeframes. Let's look at observations. 

Sail started falling right from 100 odd zone & counter is constantly making lower tops lower bottoms on broader formation. 

On weekly chart, by connecting tops and bottoms, falling wedge is seen. Marked 5 points on wedge are not in context of any wave counts. They are just depicting number of touch points. 

RSI is showing positive divergence in extremely oversold territory first time since 2015, highlighting emergence of buying interest.

On daily chart, multiple observations are seen. After touching support line of weekly time frame (which is forming wedge), stock is forming higher tops and higher bottoms. 

Inverse Head and Shoulder formation is seen. Neckline breakout came on 29th April with decent volume. Retesting of breakout happened yesterday (6th May). This retesting phase has no major volume, which is considered positive. 

Doji (hammer) is seen on daily chart, bottom of candle being on neckline itself. 

Bollinger Band: higher band breakout on closing basis came on 30th April (right on next day of neckline breakout). Median line is coinciding with neckline, which is strong support zone for time-being. Indicator is still supporting bullish formation. 

Fibonacci Extension is applied to judge probable target. Extension is highlighted only till 161.8% of first rising wave. 

Putting it all together, falling wedge support line with positive RSI divergence in extremely oversold territory of weekly chart and inverse head and shoulder formation with Bollinger band confirmation alongside supportive candlestick formations are all supporting bullish set up. 

Trading set up: One bullish candle above median line of Bollinger band on daily chart can confirm trend continuation and bullish trade can be initiated with swing low as initial stop and target being levels highlighted under fibonacci extensions and Weekly resistance line of falling wedge. 

- Kunal Rambhia

Coal India .. Either Coal Or Diamond

Hello all, 

here is a small write up on Coal India. I have analysed 2 timeframes, weekly and Daily. Let's look at observations. 

On Weekly Line chart, prices consolidated near downward slopping support line for entire month. Historically prices have bounced decently from the same trendline.

On daily timeframe, interesting setups are noticed ... 

Due to month long consolidation, price is forming ascending Triangle (rising triangle) formation, which indicates that every decline is taken as opportunity to add. Resistance zone is 150.

Bollinger Bands (highlighted in blue zone) shows that price failed to break above higher band on 17th April. Similar attempt is done again on 30th April. Price closed near band, but breakout remains pending. Resistance zone is again 150 mark. Bollinger band lower band is at 135, which is coinciding with rising trendline of Ascending triangle. 

Ichimoku Cloud (not using entire indicator) zone (red cloud due to span lines positioning) generally works as support and resistance. On daily chart of coal India, Span lines (creating cloud) are acting as resistance, that is coinciding with Bollinger bands Resistance zone and Ascending triangle breakout zone @ 150. 

RSI is rising healthily and present reading is 55, which shows decent accumulation of strength. 

Putting it all together, Trendline support on weekly chart, Ascending Triangle formation on daily chart, Bollinger band breakout zone and Ichimoku cloud resistance zone, all are coinciding at 150. Presently 150 is acting as strong resistance area. Rising Trendline (moving support) of Ascending triangle and Bollinger Band lower band are showing support zone of 135. 

Trade Setup:
Both sided trade can be initiated based on breakout or breakdown. Long above 150 or short below 135 seems the best set up. 
(One can even think of selling near resistance zone or buying near support zone. If stop is triggered, one can initiate other side trade). 

Thanks & Kind Regards,
- Kunal Rambhia