USDINR: "Pawry" May Come to an End !

 Hello all!

I got many messages asking why I stopped updating views on the blog. I truly appreciate everyone's trust in my knowledge and their eagerness to learn. I was stuck in too much work and so I took a break from writing updates. But will start updating regularly again. 

Herein I share my observation on USDINR. 

Price Action:

An up trendline is made on the chart from the bottom of 2011 till now. Multiple times price has taken support on the same line in the past. Recent lows also took support on the same trendline, showing that the trend is still positive. 

A trendline made from the peak levels of 2018 shows good support at the same zone where the bottom was formed. The formation looks like a Falling wedge. 

A trendline connecting multiple highs of 2018-2020 also created a change in polarity, offering support to the price near lows. That inflection point was highlighted in my previous updates. 

The size of bullish candles near the support zone is very large, highlighting decisiveness in the action.  

100 EMA:

100 week's exponential moving average has offered support/resistance multiple times in the past and the recent bottom was also on the same zone, confirming the accuracy of average on USDINR and also confirming the positive trend on the price. 

ADX - DMI:

In the recent falling wedge formation, it is very clearly seen that price was making lower lows and negative DMI has formed lower lows too. This is considered as "Bullish divergence" and prices have shown a decisive bounce from the lows, confirming the observation. 

Ichimoku:

Price is taking resistance at the cloud. Future cloud is also bearish, suggesting that the trend is still negative and likely to remain negative in the near future (till it crosses the cloud). 

Putting it all together:

100 EMA and ADX-DMI indicators along with the longest trendline are suggesting that the uptrend on the price front is intact. Rs. 72 is certainly the Strong support zone. Falling wedge is a bullish formation but the breakout is certainly pending. The breakout zone is coinciding with the Ichimoku cloud resistance, suggesting that the uptrend may emerge on the breakout of the falling wedge. The zone to watch out for breakout is Rs. 73.75. Ine can expect a Bullish rally if prices break out of the formation. (kindly note that all the charts shared here are weekly charts and so one needs to wait for closing basis confirmation). 

Levels to watch out:

Support zone: 72

Resistance (breakout zone): 73.75

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.

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.

Jindal Stainless Ltd: Will Stainless Steel show its Shine ?

 Hello All, 

herein I share my view on Jindal Stainless, Jindal group company. Different timeframes are analyzed with different indicators.

Price action:

Stock made a high of 130 zone during January 2018 and saw a steep decline till 22. If we see the last consolidation zone, which started somewhere from November 2018 till now, the stock is within the consolidation zone of 25 to 45. Not tagging the price action with any pattern name (can be labeled as double bottom though, with ifs and buts), but this consolidation, right at the bottom of the rally, seems very encouraging. Within this consolidation, the price tried attempting to surpass 45 zone several times. But it has failed. The neckline of this consolidation is placed near 46 zone. 

Here on the weekly chart, multiple things are highlighted. 

200 EMA:

Since 2018, 200 EMA on a weekly timeframe acted as a decent resistance for the counter several times. The best part to notice is that due to consolidation, the difference between the price and the moving average is narrowing down. The stock has not given up the attempt to surpass the same. WEMA is placed at 47. 

RSI:

Strength is gathered decently in the consolidation of the last 2 years and RSI is forming a bullish divergence. Price breakout with divergence can add fuel to emerging rally. 

Direction Index:

Since the beginning of 2018, when the stock entered down-trend, negative DMI was dominating. But since June 2020, positive DMI has taken over the battlefield. With better higher top and supportive ADX line, it's inching up steadily, which is confirming the strength of emerging uptrend. 

Volumes:

If we notice the volume activities, within the consolidation of the last 2 years, almost every up-swing had a higher volume than the low swing. This behavior is confirming the phase to be the accumulation phase of the counter. 

Bollinger Bands:

Due to the narrow consolidation of the price, Bollinger bands are squeezed. This highlights the likely emergence of a trend. (That can be an up or down-trend). The present week is the first week where prices are getting plotted outside the upper band, which highlights the emergence of up-directional rally. 

Ichimoku:

Since June 2018, the stock was well below Ichimoku Cloud. It made an attempt to surpass the cloud area (resistance zone) during January 2020, but that turned out to be a failed attempt. The successful attempt was during June 2020. The stock penetrated well above the cloud, took the support of the same and continued uptick. The lagging span is about to surpass cloud and leading spans are showing bullish crossover. This highlights a bright possibility of trend change. 

Fibonacci Levels:

Reverse retracement is taken on the price action, right from the top to the bottom. It is clearly seen that the present level is right at the 23.6%, which is placed well on the neckline breakout zone. Above this zone, likely price targets can be 38.2% and 61.8%. 

Putting it all together:

Stronger price consolidation with sizable volumes, upward sloping RSI with positive divergence, strong DMI & ADX, squeezing Bollinger bands, and clearance of resistance zone of Ichimoku, all supporting likely emergence of new bullish trend. 

Buying can be initiated above the consolidation zone neckline, which is coinciding with 200 WEMA & 23.6% Fibonacci retracement level. 

Levels to watch out for:

Resistance / breakout zone: 46

Support zone: 39 

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.

Nifty: Will Fibonacci's golden Ratio serve as Alarm again ?

Hello all, 

Herein I share my observation on the Price action of Nifty. 

In technical analysis studies, one of the basic assumptions is: History Repeats Itself. Human emotions and behaviors remain the same over years and so as its impact on the market. Thus it certainly makes sense to keep a check on market movement of the past and try to find out likely outcome in the future. 

I have observed the typical behavior of the Nifty since its inception. Herein I try to share the same with all. No indicators or patterns are applied. (Though, they can give even better confirmation). Analysis is just based on the Fibonacci tool. Fibonacci series has derived many ratios, 61.8% being one of them. It has special importance and is considered as the Golden ratio. 

In 1997, The Nifty started taking a hit from the top.  The entire correction was of 40% from the top. But after the first swing low, the Nifty bounced till 50% of the swing before falling further. 

The year 2000 witnessed the IT bubble burst and global financial markets crashed again. Nifty corrected almost 55% from the top. The entire fall was with multiple lower tops and lower bottoms. What we can see is the first fall from the top retraced by almost 50 to 61.8%. The Golden ratio was in place multiple times in the entire fall on multiple swings. I have tried highlighting the first swing. 

After enjoying the honeymoon phase of financial markets for multiple years across the world, we faced the major financial crisis in 2008. The nifty took a hit of almost 65% from the top. But wonderful to see that the first swing low witnessed retracement of 50-61.8% itself. (I have highlighted exact retracement of 50%, but can consider the first spike low and retracement of that till 61.8%)

As the 2008 correction was a mayhem, let's have a look at little more into the same. In the first chart, it is clearly highlighted that after the first swing low, the Nifty bounced and halted at Fibonacci resistance of 61.8%. From that zone, the new fall began and that made a new bottom for the Nifty in the ongoing correction. The above chart highlights that when the retracement of that last swing was in place, it ALSO halted at Fibonacci retracement of 50%-61.8% of that fall, before falling further. 

After reclaiming the previous zone of 2008 during 2010, Nifty entered in correction mode again. Though this seemed to be the combination of the price and the time correction. Nifty came down by approx 30% from the top. In this entire fall, again there were multiple lower tops and lower bottoms. I have tried highlighting 3 swings and in all swings, Nifty retraced the previous fall by 61.8% before falling further.  

Nifty saluted the victory Narendra Modiji by delivering returns of more than 50% in a very short span of time. But 2015 witnessed logical correction. Nifty came down from the top by 25% and again, multiple swings were seen during the entire fall. The first swing low AGAIN witnessed 61.8% retracement of the swing before falling further. 

Coming to the present situation, 2020 turned out to be the year of pain. Markets across the world saw healthy sell-off due to a pandemic situation. Nifty corrected sharply from the top of 12400 to almost 7500, almost 40% from the top. Sharp rebounding was seen in the last couple of months too, where Nifty reclaimed 10800 zone. 

To understand the supply zone based on the Fibonacci tool, reverse retracement is applied from the top of 12400 to the bottom of 7500. 61.8% resistance is seen near 10700 zone. As we look at the weekly charts, the last candle is an ongoing candle. 

Putting it all together:

Since Nifty's inception, all major corrections had multiple swings as part of ongoing corrections. There were multiple major Lower tops and lower bottoms too. Sharp reversals were also registered. Most of the reversals were 61.8% of the previous rally. Such healthy bounces take most market participants by surprise and trap decently in the major correction. One, as the market participant, must stay alert on such zones and shouldn't get trapped, if the fall emerges as the part of the major correction. 

Cheers,

Kunal

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.

Divis Laboratory: Will CFO news flow be a spoiler ?

Hello all, 

herein I share my observation on the daily chart of a news impacted stock, Divis Lab. 

Price Action:

During March 2020, the stock made a high of approx 2250 and fell decisively till 1630 zone. Bounce from that zone locked the high of 2550 zone. The top consolidation turned out to be of approx 3 months. Level of 2200 - 2250 became a decent support zone for the counter. On the news impacting the corporate Governance, the stock gap down opened. With strong volumes, it has recovered near the same zone again. Role reversal from support to resistance may come in place, if it doesn't recover above that zone quickly. 

Due to strong recovery, hardly any impact is seen in the line chart, which shows consolidation near major support zone of 2200, as mentioned earlier.  

Fibonacci Retracement:

The present fall from the top seems a counter-rally of the previous bullish rally from the bottom of 1630 to the top of 2550. The gap down opening on the counter got arrested right at the 50% retracement support level, 2080. 

200 DMA:

Price history suggests that the stock is decently respecting 200 DMA. As of now, 200 DMA is placed at 2050. Present fall registered the low of 2090. Seems 200 DMA is again respected in terms of support. 

RSI: 

Overbought and oversold zone of RSI is altered to 35-65, as respected by the counter. It is generally observed that in the ongoing trend, whenever there are healthy intermediate reversals (to make higher bottoms compared to previous bottoms), RSI has turned down till 35 zone and bounced from the zone. Presently RSI registered the low of 35.04, which is supporting a view of healthy correction of ongoing rally. Any reversal sign from price action will get decent support from RSI in terms of strength. 

Ichimoku: 

Ichimoku cloud has a flat support line at 2050. This is perfectly coinciding with 200 DMA. This defines a very strong support. Though prices went below lagging span line, but recovered sharply above the same.  

Volumes:

Attractive volume activity is seen on the chart whenever there is been a decline in the past too. When we study past behavior, due to price recovery from the low, the registered volume was labeled as accumulation volume. The same kind of higher volume was registered in the present fall. 

Putting it all together:

A strong positive trend from longer-term perspective still remains intact. 200 DMA, 50% Fibonacci retracement, and Ichimoku cloud support are all coinciding in the same vicinity. Strong recovery from the same zone supports the view of ongoing positive trends. Stock can be labeled as an accumulation counter without much worry on technical parameters. 

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.