ITC: Can Elephant Dance?

 Hello friends, 

Sharing my technical view on a counter that has been an underperformer on price action for quite a long time. 

Monthly Timeframe with Fibo:

If the entire journey is considered on the price action, the stock tested 61.8% zone during 2020 fall and now making higher tops and higher bottoms, confirming the mid-term positive trend. 

Weekly timeframe with zone:

Since 2013, there were multiple rallies, both, positive as well as negative. But 200 zone is been an important zone for the stock. Considering 200 to be a mean reversion zone, it's presently just onto the same zone, offering a favorable risk-reward ratio for the position.

Weekly timeframe with Average & RSI:

Price entered higher top higher bottom and RSI also continued its northward journey, confirming the trend strength. The counter is recently facing a resistance of 120 period's EMA. Strength is decently built up on the counter and so it's likely to break out. 220 zone to watch out for "Trend confirmation" as well as for "momentum trade". 

Weekly timeframe Ichimoku:

First time since 2018, the counter has crossed and sustained above the Kumo cloud on the weekly timeframe. Price is simply taking the support of the same cloud and the future cloud is turning bullish too. There is a bright possibility of the continuation of a new trend. 

Daily timeframe Trendline:

The simple trendline on the daily chart shows the change in polarity in action and the stock decently respecting the same since a year. 

Ratio chart of ITC & Nifty:

The ratio chart of ITC and Nifty is plotted since 1995. The yellow trendline is acting very strong for the Ratio since then. Also, the recent decline in the ratio is now showing positive divergence on the RSI front, onto the support trendline, which is making ITC worth seeing at present levels. 

Putting it all together:

The Ratio chart with positional view, Monthly retracement at the golden ratio, weekly 120 Period moving average along with RSI, ichimoku Kumo cloud support, all are supporting it to worth taking a positional view on the counter with the favorable risk-reward ratio. 

Cheers, 

Kunal 

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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, may be open in the counter. Prefer to take the advice of your financial advisor before initiating any position.