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:
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.
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
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
Nicely explained
ReplyDeleteLast piece of information on trading strategy is very important. I agree that stock will remain range bound / chances of going down are higher. So yes systematically selling OTM calls is a good strategy. Good Job Kunal.
ReplyDelete