INDOCO REMEDIES- A long term opportunity spotted

 Hello Readers!

Please read the analysis I recently did on INDOCO REMEDIES for a friend. 

I usually do not cover Indoco Remedies but happy to analyse the stock upon request. If you would like stocks to be analysed please write to me at kchamaris1993@gmail.com or comment below!

INDOCO

Current Market Price- 257

Target 412 (+60%)

Stoploss 235 (-8.5%) 

The short term direction for Indoco looks very unclear as the stock is range-bound, and neither the price nor the momentum indicator is giving clear signals about its short term potential action. However, the movement is encapsulated between two trendlines with resistance at 315 and support in the range of 235-240. A breakout beyond either level with help in determining the direction.

The stock is easier to analyse for the long term- It has confirmed a bullish trend in January 2020 as shown on he chart but experienced the covid shock in march 2020. Ignoring trendline breach (as it was sentiment-driven), the stock has clearly resumed the uptrend. The last few months have witnessed higher volumes (blue circle) which means there is accumulation going on in the stock and is positive. As per the weekly chart, I am inclined to believe that a target of 412 is very much possible. At the current price of 257, this means a +60% target with stop loss at 235(-8%). The risk-reward appears promising if one is willing to play the stock for the long term.

I would love to hear your thoughts about this INDOCO. 

Thanks for reading!

Kavita Chamaria 

kchamaria1993@gmail.com

CRUDE OIL: The damp days to return, another price decline on the charts

 Hello Reader!

While the world grapples with the aftermath of COVID-19, the business and finance world is struggling to adjust to the new realities as well. With lowered top-line across most of the businesses, the emergence of new sectors, higher digitalization stands to threaten several status quo previously prevalent. over the next year, we will witness many businesses go down the same path producers of chariot whips and boot heels for men did. Evolution is the key to survival for businesses. 

But what about the cost? The lowered crude oil price has send many businesses into a frenzy. Government and businesses have openly filled in their crude oil reservoirs with what they perceived as never to return cheap prices. However, what if I told you that the lower prices were returning soon? 

A simple technical analysis of the crude oil charts across different time frames has a well-knit story of the downtrend which has been unfolding on the charts of crude oil since the crash in 2007.

Crude Oil stands at $41.8 per barrel. This is historically a very important price zone. On several different occasions in the past, crude oil has taken support at this level as highlighted in the chart below. Now, with the world being a very different place, $41.8 is posing as a strong resistance. This fungible nature of price levels is quite commonly observed across stock indices, individual stocks, currencies, and commodities. 

                                    Crude Oil: Monthly Chart- Period shown : 2009 to 2020

Lower-highs, lower-lows have been observed in crude oil post the 2007 crash. The Primary trend has been down with intermittent rallies. Since April 2020, one such minor trend upside rally has been witnessed.

A quick glance at RSI shows how a penetration below the level of 30 has meant more bad news for crude oil. Back in Dec 2014 when RSI broke below the level of 30, prices could only temporarily recover after that. Soon in Jan 2016, crude oil forged a new price low after falling 50% from its recent high of $61 to $27 per barrel.

History can be seen repeating itself. Today, crude oil price stands at the strong resistance zone of $42 PB, with lost momentum and at the edge of a cliff. It is only a matter of time when crude oil prices will fall again and forge a new below $20.  We are discussing the possibility of a 50% price slide from the current levels as indicated by RSI. 

                                    Crude Oil: Weekly Chart- Period shown: 2009 to 2020

After having looked at the monthly and weekly charts of Crude Oil, the story recited by the Daily chart is no different. It reverberates the eminent message of downfall by means of the Negative Divergence between price and RSI. Negative divergence is an indication of lost price momentum. It is especially potent when it occurs close to an important price resistance (like $42 in this case) after a prolonged rally.

All across the time horizons- monthly, weekly, and daily, the tale of weakening crude oil prices can be heard loud and clear. It is best to be cautious and brace ourselves for what is to follow. The pain of hammered crude oil price is going to resume.

 

                                    Crude Oil: Daily Chart- Period shown: March 2020 to Aug 2020. 

 That's all on crude oil. 

Thanks for reading!

Choose the platform you use the most and follow the link to follow Let's get Technical on the go!

Blog: https://goo.gl/qd2jDG

Twitter: http://bit.ly/2QLoQm6

Facebook: http://bit.ly/2RQErlN

LinkedIn: https://bit.ly/2QR4ZBY

Instagram: https://goo.gl/ftYub6

Also, join my FB group! https://www.facebook.com/groups/250550478994070/

Regards,

Kavita Chamaria

kchamaria1993@gmail.com

Nifty 50 - Ready for an upswing!

Hello Readers!

Nifty update:

Nifty has corrected steeply over the past weeks. In the last Nifty update, the macro reasons behind the steep fall in Nifty were stated. In the following days I also posted about the bearish engulfing pattern which had emerged on Nifty's Daily chart and indicated further weakness with an infograph on my facebook page.

Nifty went on to breach the 10200 low exactly as per the analysis stated and closed near 10150 level today. However, the bear trend has been going on for a while now and few evidence on the charts plus an inter-market factor indicates that bears might want to take a step back (temporarily only) for now and let the falling Nifty take a break from all the chaos.

Evidences indication pullback on Nifty's chart:

1. Appearance of the Spinning Top: The candle stick pattern formed on the daily chart of Nifty is a reversal pattern. The spinning top  is a pattern which indicates indecision and represents struggle between the opposing forces (bulls and bears) which determine the trading prices. 

The image below highlights the spinning top and explains the significance of the pattern. The occurrence of such indecisive pattern close to importance support levels is often an indication of bear trend reversal, even if its temporarily.

2. Trendline support: Trendlines offer strong support/resistance zones. Nifty has reached one such strong support level which I believe may help the index take a breather before resuming the corrective movement against the primary trend. The resistance by virtue of another trendline lies at the level of around 11100. 

3. RSI Positive Divergence:  RSI is my favorite indicator. It is a leading indicator and has on several instances given superb signals of trend reversals. Nifty's daily chart has shown one such positive divergence. A positive divergence occurs when the indicator does not forge a new low as compared to the price. This divergence is a hint towards underlying strength. Again, the occurence of the positive divergence near a trendline and close to the oversold zone increases its potency. 

The above three factors are purely technical related. An inter-market factor which also indicates that a reversal in Nifty is due is the weakness in Crude oil price. It has fallen over 5% on 23rd Oct that is today. Crude oil price and stock market are inversely related. Rising crude oil price was a major factor behind the falling stock market price over the past few months. The weakness therefore is expected to provide some strength to the index. 

The above 4 factors are in my opinion sufficient to keep the index from sinking further in the immediate future. The rest will unfold with time, till then, adios!