Short term Investment - TCS and Amrutanjan

Amrutanjan 

Chart says it all. Amrutanjan is at strong support and one can enter for short term better benefits and expect a new high or can liquidate its position at all time high

Basics for beginners: (After Market updates)

Whenever stock is in uptrend (means price of stock going upwards), it does not goes in a straight line directly. It undergoes some correction (temporary downside after going up) as can be seen in chart. So, traders buy stock at lower levels and whenever they feel that price has surged enough and that they are satisfied with the profit and start thinking that price may collapse anytime or its a decent price to book profit, then they start selling leading to fall in price. This fall in price is called correction. Then the time comes when Price of the stock finds a support, where traders think that its a decent price to buy again. So, again upward movement continues. This is what is visible in above chart too. So, question arises, what is the decent price to enter and exit??? (means buying and selling respectively)

For that there are so many indicators and tools available readily. Market uses terms like overbought and oversold for it. I generally use Moving Averages, MACD and RSI as primary indicators and few more tools to confirm my trades. Here, Moving Average 50 is visible as support. For your understanding, I have used both type of Moving Average 50, i.e. Exponential moving average (green line) and simple moving average curve (purple line). Also, I covered the price movement with envelope(Default setting as per upper overlay indicator in chartink.com) which can give idea of resistance and good point of exit

Also, few guys generally rely on trend-lines as explained in previous post. Lets have a look at updated chart

This post was created just before market. and updating it after market. So, you can see, there is an additional candle on chart representing today's price. Stock gave 5% intra-day gains for traders. crossing 500+ within 3 hours. But there is still enough potential left in it. Though Market fall today, but Amrutanjan was rising. This is called exploring hidden opportunities even at worst times.

Hope now you understood, what is really "BUY LOW SELL HIGH" or "BUY on  every DIPS"

TCS 

Observe Blue dotted Horizontal line. It has been proved as good support in the past after every fall. Though TCS gave lower than estimate results, TCS is a strong stock and one can think of buying if it falls. And that point has come Finally. Investors can buy more to average their stocks if bought at higher price in the past and traders can also buy for short term profit from pullback. 

Disclaimer: I am an independent trader and I may or may not trade on calls I generate. The sole purpose of blog is learning and author is not responsible for loss made on trades executed on calls generated here. So take your own trade decision wisely 

Stock Trading with Sector Analysis

Pharma Stocks 

Pharma Sector saw a good rally few days back but started correction next week. This was not a downtrend but just profit booking, which generally takes support at Moving Averages or Fibonacci levels as shown in the chart. Thats why both price levels have been shown above. So, from the chart, it is evident that profit booking is about to get over in pharma sector and sector can see rally continuation soon.

Following chart combines both price levels

Sun Pharma

It is very much clear from the chart that Sun Pharma is exactly following the pattern of Sector chart. Even Sun Pharma is about to take support soon and ready to bounce back for rally continuation as shown in the charts above. Moving Averages or Fibonacci should be considered as support levels. Let us combine both the indicators and then understand how to take trading decisions based on this charts

Trading using chart

As shown by arrow which is at 50%, it looks like correction should be over and the moment stock turns green (means positive indicating price is rising) on watchlist, traders tend to enter at this levels. My suggestion would be to wait for Stock to sustain above 1030 levels for at-least an hour. if it sustains, then  we can buy stock. But it seems to be least likely looking at MACD. I expect stock to correct a little bit, just like CNX Pharma. My first level to watch should be 1014 (EMA 50 as shown in chart), and if stock breaks that level also then I can buy with full force at up-to 990 levels (61.8%), provided no negative news comes out to drag stock down. So, to prevent loss from uncertainty, Stop loss should be at 4-5 Rs below 61.8%. levels (985). But we should not wait for stock to reach bottom lines, rather we should start buying stocks at more dips for uptrending stocks and keep on averaging it at lower levels.

Wockpharma

As can be seen on charts, Wockpharma is already on 50 EMA support. So, one may think that correction (profit booking) is over and stock can bounce back from here. But as we saw Pharma sector, it still has some potential to dip, so be cautious before buying it. But ofcourse, it is a uptrending stock, we can think of buying on dips and averaging it

Now lets look at Fibonacci levels which gives better and more reliable levels of price corrections

As in sync with Pharma sector, 38.2% is at 1565, where stock should find strong support. But it doesnt mean we should wait for that level to come. As can be seen, Stock seems to be taking reverse from 50 EMA. So buying on Dip and averaging the stock will b a good strategy.

Stop loss should be below 1565, i.e. around 1560 for any uncertainty

Combined Chart for convenience

Final Note: Above comments are made on Daily charts and should not be used for Intraday trade. Analysis done on Daily charts should e used for swing trading decisions (means 1-2 weeks time frame for acheiving target)

Disclaimer: I am an independent trader and I may or may not trade on calls I generate. The sole purpose of blog is learning and author is not responsible for loss made on trades executed on calls generated here. So take your own trade decision wisely

Nifty Zoom out. Learning support zones

There are various ways of finding support zones. Today we will understand 2 most popular support lines terms (Moving Averages and Trend-lines)

1. Moving Average:

Moving Average lines are used to find support and resistance zone. Generally Stock price tend to respect particular Moving Averages. But problem is, lot of books mentions using Moving Averages in general which makes it difficult to implement. Lets understand how we can use it. For General theory, I will suggest please refer online articles and YouTube for learning the basics as they are available everywhere. Here we will be learning the implementation of basics for Indian Stock Market.

By assuming reader is well versed with basics, here we start.

Here is the chart of Nifty 50 Daily candle with three Moving Averages.


Blue Line - 50 EMA (Exponential Moving Average means average calculated of 50 days exponentially with recent price with higher weightage)

Yellow Line - 100 SMA (Simple Moving Average. means calculated Average of 100 days simply)

Orange Line - 200 SMA (200 Days Simple Moving Average)


As we can see, Nifty 50 EMA and 100 DMA consistently this year. 200 DMA (Daily Moving average either exponentially or simple) is stronger support for any stock. once broken and sustained below for sufficient time, 200 DMA becomes resistance line. This change over happens when company fundamentals lose it shines or vice versa.

Last month, we can see there Nifty broke 100 DMA badly because most of the companies under Nifty 50 gave bad quarterly results (Q3 FY2014-2015 called as Third quarterly results of the Financial Year 2014-2015 showing the performance of the company between 1st October to 31st December and results are out generally by Jan February). With Bad Q3 results, market also started expecting bad Q4 results. But at 8200 level, Nifty become so oversold that it could not sustain at those levels for long and bull rally started again.

This time, Nifty 50 has already broken 50 EMA line and heading for 100 DMA line which is at 8567.49 and current Nifty price is 8606. if such fall continues even after 100 DMA, then there is a huge between 200 DMA (8235.88) and 100 DMA. But can we say there is no support between 100 DMA and 200 DMA and we should wait Nifty to come in oversold mode for pullback ???

Lets understand another method:

2. Trendline:

Trendlines looks like very simple lines. but in practice its really tricky. Lets have a look at 2 charts above, here we can see, where Nifty was stopped by resistance in Former chart and where Nifty is expected to take support in later chart. It looks tremendous skill to draw trendlines. Trendlines are drawn by joining 2 points (extreme bottom point or top point) and matching it with third point.
Above trendlines looks like perfect support and resistance lines. Now let me combine both the lines in one image

Here, both lines are not parallel people have habit of watching support and resistance lines parallel, it doesn't mean this lines are false support and resistance. For more insights, click on following link:
http://www.swing-trade-stocks.com/draw-trend-lines.html

http://stockcharts.com/school/doku.php?id=chart_school:chart_analysis:trend_lines

http://www.investopedia.com/articles/trading/06/trendlines.asp


On the basis of above chart, we can predict that should take support on green trend line to bounce back for bull rally and if broken, we can expect previous low of 8269 as Support price levels. and if Nifty crosses 8269 and sustain below that means Nifty may experience a bearish market.

Just for reference, here is a long term Support and resistance trendline for you

And finally, Combining Moving Averages and trendlines

Hope, This article was able to help readers understand the application of theoretical knowledge.

In case, you have any suggestion or feedback, do write us:

jeevraj.vjti@gmail.com

Nifty short term view

Nifty 5 minutes chart

Means, I selected candlestick of time period 5, where 1 candle indicates 5 minutes High low open and close  value (Price) of Nifty. Will write one article on few basic terminology soon. This blog is prepared in between the market time when market was completely stabilized and it was difficult to predict anyside view. So after zooming in Nifty Chart (that is keeping candle size of smaller size ) it can be observed that price is between the trend line drawn. Anyside breakout will decide the journey of Nifty.



Updated after market closing

Finally Nifty broke out downside with huge gap in short time. But it should not be considered as downtrend continuation. As you can observe, this gap down happened during last few minutes trade, when the market is highly volatile. If this would have been between the market time, then we would have gone Short selling for short time gain of maybe 30 points from breakout line.So, to know further movement of Nifty, lets zoom out Nifty to find out 3-5 days trend in next post

Dont be overconfident on discovering the pattern

Don't be overconfident on discovering the profit-making pattern, whatever maybe the situation and however strong maybe your pattern, work on Strict Stop loss. Because market is tricky and can trick you anytime. Today we will study one case of Reliance and very common pattern of triangle formation.

As you can see Reliance has formed Symmetrical triangle but it broke the triangle strongly. as per that, strategy will be to short sell (Sell first and buy afterwards) with a target equal to maximum height of triangle from the point at which stock breaks out (100 points in this case)

Triangle maximum height is 943-832=111 points approximately (shown by green line between triangle)

So, Target will be 839-111=728.(shown below the triangle as green line)

But as you can see, Stock reached till 795 low and bounced back above to give new breakout upside. In that case new target should be 111 points above the breakout point. means Reliance should give new high soon.

Lets try to understand what could have happened. Reliance was poor on chart for long time, in that case, it was bound to come around 750 as per Technical analysis. but recently all Reliance stocks are rising with Nifty and tomorrow Reliance result is scheduled. it means market is expecting good results which was getting discounted in the price of all reliance stocks before results are out in-spite of few negative news.


So, whatever maybe the case, make sure you are strict with your stop loss and should not think that your pattern is strong enough to be successful 100%.

This article is not meant to scare people but to make them realize that how stop loss is very important and how can it save your loss. So, Disciplined trading is very important and trade without any greed and fear


Happy Trading!!!!!


Disclaimer: I am an independent trader and I may or may not trade on calls I generate. The sole purpose of blog is learning and author is not responsible for loss made on trades executed on calls generated here. So take your own trade decision wisely. Trade with a discipline

Coal India Part 2

After spotting coal India yesterday at right time for 2% intraday gains, here I came back with Coal India again with long term chart analysis for making some big money.

 With long Term Chart analysis, it is clearly evident that Investors entered one year back and after it hit High of 424, consolidation (Profit Booking) started dragging stocks down to 333 level (50% retracement) and thereafter it became range bound fluctuating between 360 and 400. Stock is now trading at 392 and heading for its all time high of 424. But lets have a closer look to see whats kept in between for Coal India to reach all time high.

Bulls are powerful now and ready to reach 400+ non stop. Also Arrow mark shows whenever MACD Blue line crossed Zero line, Coal India gave good Intra-day gains but this time bulls are non stop. So, 400 should immediate resistance and few investors or traders should think of profit booking at that level, but once its crossed and sustained above that level, we can see new high soon.


Disclaimer: I am an independent trader and I may or may not trade on calls I generate. The sole purpose of blog is learning and author is not responsible for loss made on trades executed on calls generated here. So take your own trade decision wisely 

Enough for Federal Bank

Federal Bank was in good rally from the month of August till December. From December on-wards  it started trading range bond with heavy profit booking by investors. Stock was trading range bound till last month after which, triple top formation made the sentiments in favor of Bears (Sellers). Its a high time for Banks now. Rate cuts with RBI favoring Bank sector. Also, for Federal Bank, Stock has already retraced till 61.8% (Considered as golden Fibonacci Ratio). With banks sector zooming, its difficult for Federal Bank to fall further to reach next price level of 119.8 (78.6% Level). Yesterday Stock closed with a Doji which indicates uncertainty among traders. Following 30 Minutes should give idea of power of Bears.

As it is clearly evident from 30 Minutes chart that Bears have brought the stock down with full charge but after touching the 127 Level, (which is 61.8% level as per long term chart) bears have been weakening. Observe the region marked with Black circle where we can see trading at flat.
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Now with the high time for Banks, we should now see some up upwards movement with fresh rally. For confirmation of Upwards movement and to find out the time as when can we see upwards movement, lets analyse long term chart with another view

After Observing the MACD and RSI over long term we can see that RSI below 30 is difficult but when it comes below that, Stock should jump from that level provided it gets support from other factors. MACD Bullish Crossover and RSI touching 30 from below gives good intraday rally. Last attempt was at March end but MACD Divergence was very was on negative side. Now Again RSI is touching 30 from below and this time Divergence is closer (-0.30). So, tomorrow we should expect good rally for Federal Bank.

I am expecting a new high in near future and am completely bullish right now. Its Enough for Federal bank to be in control of bears now