Maruti: Loosing Momentum ?

Hello, 

Happy Navratri to all!

Herein I share my observation on the Daily chart of Maruti. 

Price Pattern Formation:

On the daily chart, the stock rebounded nicely from the low of 4000 to 6000 zone. During this entire advance, every successive high was weaker than the previous high. This formed Rising Wedge. Break-down of the pattern remains pending. 

Price Gap:

During March fall, on 12th March, the counter opened Gap down and the price gap between 6105-5940 was seen. As per the gap condition, that area was expected to witness some selling pressure. In the recent bounce, the counter registered high of 6007, which was in the vicinity of the same zone, confirming the resistance zone. 

Candlestick Formation:

On 23rd June, when the counter registered recent high of 6007, the closing turned out to be weak, and the Shooting Star kind of formation was observed. As shooting star formation needs one more day of bearish confirmation, the next day turned out to be bearish engulfing, which is serving as icing on the cake. 

Fibonacci Retracement:

Reverse retracement from the top of 7500 to the bottom of 4000 is applied to find out resistance. 61.8% retracement, which is the golden ratio in the Fibo series, is getting placed at 6200 zone, which is coinciding with gap area. This seems to be the temporary resistance zone. 

Indicators:

200 EMA:

Till now, the counter has decently respected 200 EMA. 200 periods' exponential Moving Average is placed at 6070. Till now, it seems to be working as a resistance zone. 

Bollinger Bands:

Shooting star formation of 23rd June couldn't surpass the higher band of Bollinger. Presently the counter is hovering near the middle line. Presently that is acting as a support zone. Once taken out, this can generate a decent bearish signal. 

Beauty lies in the fact that the lower band of Bollinger is coinciding with the support line of the rising wedge. 

RSI:

The peak of 1st June and the peak of 23rd June showed a price rise with losing momentum, which is clearly seen in RSI. Indicator RSI is forming bearish divergence on the daily chart. This supports cautious to bearish view. RSI at 56 seems perfectly placed for a new trend to emerge. 

Putting it all together:

Last leg of the Rising wedge with a Shooting star and bearish engulfing formation, along with price gap zone, retracement zone of 61.8%, along with 200 EMA and Bollinger band zone, all are highlighting strong resistance of 6000-6100. Weakening RSI and sign from Bollinger band may help to initiate a POSITIONAL BEARISH TRADE with an extremely favorable risk-reward ratio. 

Levels to watch out for:

Resistance Zone: 6000-6200

Support levels:5700, 5450, 5175, 4700, 4000

Cheers,

Kunal 

Statutory Disclosure:

Kindly note that this sharing is only for educational purpose. It is safe to assume that my personal position, my fund's position, and my client's, as well as relative's position, maybe open in the counter. Kindly prefer to take the advice of your financial advisor before initiating any position. Prefer to keep the risk-reward ratio in mind based on personal temperament, risk appetite, and financial background.

Cholamandalam: Will Murugappa Group Outperform Peers ?

Hello All, 

Herein I share my observation on daily chart Cholamandalam Investment & Finance. 

Daily chart

Pattern Formation:

On the daily chart, the stock was clearly under bearish trend with sideways bias, forming a falling wedge. Pattern breakout got confirmed today based on the closing price. Breakout candle seems extremely bullish candle with closing near high. The falling wedge formation is getting initiated from 200 zone, which seems the likely level to get achieved, if the rally continues. 

Wave formation:

The entire fall from the top seems like an impulse, with the last leg being ending diagonal. Further formations seem like corrective up. One needs to remember that the expected up move is a counter-rally of the main downtrend.

Volume:

During entire wedge formation, ascending volumes were seen, which can be labeled as accumulative volumes. Breakout day volumes (today's volume) are the highest recorded single day volumes of the last 4 years. 

RSI:

Momentum indicator is rising steadily since 23rd March and clearly making higher bottoms. The stock was forming lower bottoms, which confirmed bullish divergence. RSI indicator is at 60, which confirms decent strength in the ongoing direction. 

Ichimoku:

The stock entered the cloud zone on 10th June and since then it was in consolidation within the cloud, hovering near lead 1 and taking its support. There seems a new rally emerging in the counter after clearing all hurdles.  

Retracement:

If Fibonacci reverse retracement is applied from the top of 350 to the bottom of 150, 23.6% is placed at 175 and 38.2% retracement level is placed at 208 zone. 

Role Reversal:

Falling from 350 zone, during October 2018, the counter made a decent bottom near 208 zone and bounced back to 350 zone. In the recent crash, the counter fell decisively below the 208 zone. As per role reversal, earlier demand zone may act as supply zone. 

Relative Performance:

Here, all peers are compared on the price chart on a relative basis. In the first chart, it is seen that the entire sector is under the positive consolidation after making a bottom during mid of March. Most of the counters have claimed a 23.6% retracement zone. 

In the second chart (zooming only on recent uptick), Chola (highlighted in blue color) seems to be clearly gaining strength. 

Putting it all together:

Falling wedge breakout and supportive wave formation with the highest volume within the Ichimoku cloud with strong RSI and outperforming peers support bullish view. 

Reverse Fibonacci 38.2% level is getting coinciding with previous support (now probable resistance) zone and the beginning of falling wedge formation may act as a probable target zone (approx 200-208).  

Statutory Disclosure:

Kindly note that this sharing is only for educational purpose. It is safe to assume that my personal position, my fund's position, and my client's, as well as relative's position, maybe open in the counter. Kindly prefer to take the advice of your financial advisor before initiating any position. Prefer to keep the risk-reward ratio in mind based on personal temperament and background. 

Cheers,
Kunal 

SBI: Whether it will surprise on Upside ?

Hello all ...

Herein I share my observation on the Daily chart of SBI. Due to multiple observations, here I will try to highlight individual observations on separate charts. 

Pattern Formation: 

On the price front, the stock fell massively right from 330 zone to 150 zone. The last leg of correction turned out to be a little slow, making falling wedge kind of formation. Breakout of the falling wedge is placed right on the resistance line, numbering as 164. The pattern breakout came yesterday (1st June). 

Wave Formation:

The entire fall seems like an impulse, with the last leg being ending diagonal. Further formations seem like corrective up. One needs to remember that the expected up move is a counter-rally of the main downtrend. 

Volume:

During the entire formation, volumes are seen as pretty healthy. Due to consolidation formation, I would prefer to label this as accumulation volume.

Candlestick formation:

Yesterday's breakout candle was a strong green candle. Decisiveness is seen based on the candle formation. 

RSI:

Momentum indicator RSI is rising steadily since 12th March and forming higher bottoms vis-à-vis price, which is forming lower bottoms. This confirms positive divergence. Positive divergence with falling wedge may serve the best to capture momentum trade. RSI is placed at 50. The emerging rally may gain further strength. 

DMI-ADX: 

Both the DMIs have converged at 25 zone. Crossover of DMI (change of trend) is about to happen. ADX has fallen sharply from the highs, confirming the possible end of the downtrend. ADX may take support near 25 and rally along with possible dominating green DMI. 

Bollinger Bands:

Since the fall began from 320 zone, the counter was well below the average line (signal line) of Bollinger bands. Decisive crossover is seen on the average line with volume. This is supporting a possible trend reversal. Here the idea is to take possible trend reversal clue using Bollinger Bands. Further clues awaited on this indicator. 

Ichimoku:

Kijun-sen line (base-line) has acted as resistance since the fall has begun. Presently stock has tested the same resistance line (after giving breakout of falling wedge). Base-line is placed near 172 zone, which is also yesterday's high. Once price manages to cross the base-line, there seems no other resistance till clouds which are placed at 194 zone. 

Retracement: 

Reverse retracement is applied from the top of 330 to the bottom of 150 zone to find the potential resistances. The earliest resistance is at 23.6% which is at 192, getting coincide with the gap area and also the Ichimoku cloud zone. 

Putting it all together:

Falling wedge breakout, Base-line of Ichimoku, and Bollinger bands confirmation with RSI divergence and DMI Crossover along with strong volumes supporting possible bullish scenario. 

On breakout confirmation, one can eye on retracement levels and Ichimoku cloud zones as possible targets. 

levels to watch out:

172-173 (base-line and yesterday's high)

163 zone (falling wedge / ending diagonal breakout)

Reverse retracement levels as potential targets

Statutory Disclosure:

Kindly Note that sharing is for educational purpose. My personal position, my fund's position and my clients' positions may be open in the same counter. It is preferable to take advice from your financial advisor before initiating any position. Also, I prefer to keep the risk-reward ratio in mind based on personal temperament. 

Kind Regards,

Kunal Rambhia