RECOMMENDATION - BUY AT CMP
TARGET- 335 , STOP-273, TIME -T+14 DAYS (APPROX)
RATIONALE -
The stock had been in a sideways trading range for many months. It finally bottomed out around the 230 and rallied.
This rally has shown 4 distinct waves so far. Third wave topped out around 295 and the stock tumbled to 245. The prognosis of the third wave came under severe scrutiny on Monday's trading session because of the marginal overlap between the first and third wave.
An 'head & shoulder' pattern evolved on the hourly charts with neckline at 273. This neckline was decisively breached on a closing basis. But the stock managed to stage a strong bounce back almost immediately confirming the failure of the pattern. Failure of such potent reversal patterns lead to sharp rally on the upside since all weak hands are out of the system due to the technical jolt. Bad results would have caused even greater panic.
The confluence of the above factors makes a very interesting trade set up. The risk is clearly defined at 273 (the break down level of the perceived head & shoulder pattern). Based on the failure of the pattern an immediate target of 335 can be easily ascribed.
Previous recommendations on the stock - click here
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Disclaimer : The recommendations mentioned herein are for educational purpose only. One should not take buy/sell decisions based on the above analysis which is prone to errors. The author does not undertake any liability whatsoever arising out of profits/losses accruing from using the above analysis.
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