Tata Motors: Will Zero Debt Target Fuel The Rally Further ?

 Hello All,

Herein I share my views on the daily chart and weekly chart of Tata Motors using different tools and indicators. 

Price Action:

Just by focusing on the last up move in the line chart, resistance and support lines are made, which are highlighting a possible rising wedge. The recent uptick was faster and price action was steeper. The blue support line was well respected, but in the last 2 days, the support line was broken. Price may come to test the red support line. 

Also double top formation seems likely, as price rise halted in the same vicinity of the previous top. It's on a very early stage to call this double top, but looking at RSI formation (which is explained in later part), this formation has higher possibility of happening. 

Price Action: 

Looking at the broader formation, one can see that the trend is clearly negative. Prices have reached 2 years old resistance trendline zone. Pause in the ongoing upmove is likely. 

Fibonacci Retracement:

After declining from the zone of 200, the stock made low near 60s. The reverse retracement of this entire fall is checked. The golden ratio 61.8% is highlighting resistance zone of 148. The stock has taken pause in the same zone, which reaffirms the belief of likely pause. 

RSI:

The stock price inclined and made higher highs but the momentum indicator started fading away near overbought zone, made lower tops and confirmed bearish divergence, which is suggesting caution in the ongoing rally. 

MACD:

A lagging indicator MACD is also confirming a crossover signal, which again confirms the likely pause. 

Weekly chart of Tata motors:

Ichimoku:

Multiple interpretations are available on ichimoku indicator, when placed on weekly timeframe. It is clearly seen that the stock has multiple times faced resistance of cloud since 2017. Presently, the stock has halted in the same zone and created shooting star on weekly chart after a bearish candle. 

Tenkan Sen and Kijun Sen crossover is seen but the slope of them is flat, which confirms no major trend change in the recent past. 

Future Kumo cloud remains bearish and Span B is flat. 

Present kumo cloud is also bearish and there is no sign of kumo twist. 

Chikou span is just reached kumo zone, where it has faced resistance multiple times in the past. 

All signs indicate NO trend reversal from bearish to bullish. 

Exponential Moving Average:

As I have shared multiple times in the previous posts also, the best moving average is the one which had offered the best support resistance zones to the prices, here I came across the moving average which suits the best on the counter. i.e. 85 periods' EMA. The price has taken multiple supports and resistance in the last 4 years. The counter made bearish candle formation in the same vicinity of the moving average, which reaffirms likely pause in the ongoing rally. 

Putting it all together:

Rising wedge and possible double top on the daily chart near 61.8% retracement zone, along with RSI divergence and MACD Crossover and most of the parameters of Ichimoku on weekly charts along with 85 period EMA confirms likely pause in the ongoing rally. 

Remember, I am using the term "Likely pause" as intermediate trend reversal confirmation remains pending and I can't deny the continuation of rally. But looking at the discussed parameters, the risk-reward seems THE BEST to initiate bearish trade. 

Cheers,

Kunal

Statutory Disclosure:

Kindly note that this update 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.

USDINR: Will it stop sliding further ?

Hello all, 

herein I share my positional technical observation on the weekly chart of USDINR. 

Price Action:

After the massive decline in prices from the peak of 77 zones, the price has taken the support of the 2 years old long term trendline last week. Doji is seen right onto the trendline, highlighting a likely pause in the downtrend. The rising wedge pattern seems to be unfolding, where the last leg of uptick remains pending. 

Moving Average:

On the weekly chart of USDINR, using the trial and error method, it is seen that 75 period's EMA offers the best support and resistance. Being an average, certainly few whipsaws are seen. But this seems to be the best moving average as per the past price behavior with respect to the support and resistance. Presently, the price took support on the same moving average, which is coinciding with the trendline support. 

RSI:

There are 2 main observations on the RSI front. 

The overbought and the oversold zone is rearranged as per the past behavior. It is seen that recent prices pushed the RSI near that support (oversold zone) of 35 levels. In the past, prices showed decent reversal after RSI reaching this zone. 

The second thing to notice here is that the prices are making higher lows and RSI is making lower lows, taking good support of the downward sloping trendline. This seems to be forming a hidden bullish divergence. Though a divergence doesn't offer any trade as such, but it certainly serves the purpose of being cautious about the ongoing (down) trend. 

Ichimoku:

Here are again multiple points to notice. 

Tenkan sen has crossed Kijun sen on the lower side, but Kijun sen is still flat. So this can be a minor correction of the ongoing major rally and there seems a bright possibility of the main trend continuation. 

The present Kumo cloud seems to have offered the best support to the declining price. 

The future Kumo cloud is still bullish with upward-sloping Span A and slat Span B. This offers the ray of hope for the trend continuation. 

Chikou span is within the price action, confirming likely consolidation of price action before new / continuation of the rally. 

To sum up the whole indicator outcome, there is a bright possibility of a sideways move, followed by the potential trend reversal (from the recent downside to the upside). 

Putting it all together:

Doji candle followed by the bullish candle (ongoing weekly candle), right onto the two years trendline support and 75 periods' EMA, strong RSI (based on oversold region), and hidden bullish divergence along with all bullish signs from Ichimoku is creating a reliable bullish environment for the price action from hereon. One needs to remember that observation is on the weekly chart and so view remains positional. 

Cheers, 

Kunal 

Statutory Disclosure:

Kindly note that this update is only for educational purposes. 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.

Bajaj Auto: Bumpy Ride Ahead ?

 Hello all,

Herein I share my observation on Bajaj Auto price action. The chart is of the daily timeframe. 

Price Action:

Since the bottom formed in March, the counter was clearly moving in a rising channel, satisfying the perfect condition of the uptrend by forming the higher tops and the higher bottoms. 

During July & August, the counter entered sideways movement and ended making double top formation (triple tops are also arguable, but interpretation would remain more or less the same). The neckline for the same is placed at 2910. On 2nd September, price closed decisively below the neckline zone, triggering a pattern sell call. 

After forming a double top, prices entered the lower top lower bottom formation, highlighting a clear trend reversal. During the downtrend phase, the eye-catching activities are seen on the volume's front. With every downtick, the volumes have peaked up, confirming the emergence of the strong downtrend. 

Fibonacci Retracement:

The reverse retracement is applied from the top to bottom. A wonderful thing to notice is that prices formed a double top, right in the vicinity of 88.6% retracement, and reversed decisively. The retracement was deep enough, but the reversal seems decisively sharper. 

RSI:

The momentum indicator highlighted negative divergence near the overbought zone (defined based on the past behavior of the stock). Presently RSI is in the down trend, which confirms the ongoing trend. 

Bollinger Bands:

The previous trend was well defined within the upper band and middle average line. After forming a double top, the price fell well below the lower band and closed decisively. This confirms the emergence of a downtrend. 

Ichimoku:

Well defined lagging indicator confirmed the previous entire positive rally. Price swiftly fell within the cloud, which challenges the positive trend. Span crossover highlights the possible emergence of a downtrend. 

ADX-DMI:

Bullish DMI was dominating since April till August. In the recent small downfall, -ve DMI spiked up well above highs of +ve DMI, highlighting downtrend is possibly gaining dominance. ADX confirmation remains pending. 

Putting it all together:

Trend reversal by forming double top formation near 88.6% retracement level with healthy participation on volume front, along with weak RSI, Bollinger band confirmation, & price within Ichimoku cloud with dominating negative DMI confirms "potential trend reversal". 

Levels to watch out:

Support zone: 2910

Potential target: 2650

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.