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.