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.

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

Maruti ... Will the breaks fail for short term ?

Hello all ...

Herein I share my observations on the daily chart of Maruti. Again, due to multiple observations, the chart may look clumsy. Kindly read the theory alongside the chart. 

Pattern formation:
Stock is in consolidation since 24th March. This consolidation seems more like a symmetrical triangle. Breakout of the symmetrical triangle is at 5160 zone. 

Waves:
Not highlighting the details, but as per the hourly chart, the stock seems to be formating zigzag formation as per wave counts (with extended wave b). The Stock seems to be heading for wave C (impulse). 

Candlestick Pattern:
The last 3 trading sessions were pretty strong for the counter. Everyday closing was clearly higher than opening. Not exactly textbook replica, but still formation is more like three white soldiers. This pattern supports bullishness.

Fibonacci: 
Reverse retracement is taken from the top of 7230 to the bottom of 4000. The stock reached till 50% in the recent past and presently it's halting right at 38.2%, which is at 5228. This zone is coinciding with the symmetrical triangle breakout zone. On breakout, one can expect higher retracement levels to be achieved. (kindly note that importance is given to zone, rather than absolute number)

Ichimoku Clouds:
On 28th January, the counter fell below Ichimoku Cloud. Since then, it couldn't really surpass the clouds, and clouds became resistance area. It tried entering the cloud zone on 13th May, but couldn't sustain it. Successful closing came on 21st May inside the cloud. Follow-through buying was also seen. This is a positive sign as per the indicator. Doors are open till 5620. 

50 EMA:
Since breakdown during the end of January, 50 EMA on the daily chart is working well as resistance. The stock tried crossing it several times, but unable to do so. Presently, 50 EMA is placed right at 5240. This level is again in the same vicinity. 

RSI: During this entire consolidation zone, the RSI is gathering momentum. Kindly note that this is very common during the consolidation phase. The positive side of this is that the RSI is placed at 54.60, which is showing a good strength and any directional rally may gain decent strength. 

DMI: 
DI Lines are in consolidation mode, hovering near 25 mark. ADX line is at the extreme bottom. Any directional trade, when emerges, will likely be decent in magnitude. 

Volume:
Healthy volumes are seen in this entire consolidation phase. As this consolidation is at the lower end of the chart, calling this volume as accumulation volume would be fair. Though, confirmation will be on breakout/breakdown. 

Observation:
Today (26th May), the stock has managed to open with Gap. This gap-up opening has helped the counter to deliver breakout on the symmetrical triangle. This seems a very strong sign, provided closing turns decent. 

Putting it all together, symmetrical triangle breakout, Corrective wave formation, Ichimoku Cloud levels, 50 EMA & Fibonacci retracement, all levels are in the vicinity of 5200-5240. Strong RSI, stable DMI, healthy volumes, and bullish candlestick pattern formation are supporting a bullish view. 

Keeping the risk-reward ratio and own temperament in mind, one can initiate bullish trade.

- Kunal Rambhia