ADANIPORTS

Hello Readers!

Here's the quick analysis on Adani Port upon request from one of you-

ADANIPORT is currently trading at 342.50 after a slight correction of 12% over the last two weeks. The resistance marked on the chart below is at 363- an important level. In the past it has acted as a support level multiple times- two such instances have been highlighted on the chart below.  

Click to enlarge        Adani Ports Daily Chart as on 14/9/20

Turning our attention to support on this stock, it is not a level but a zone- 309 to 319.

RSI on the daily chart turned up from 30 ( marked by arrow) while price took support at the above-mentioned support zone. This is a good indication of strong underlying momentum.

To wrap it, adaniport looks positive. However, I would wait for sometime to take a long position in pursuit of a more favourable risk-reward-ratio. 330 seems like a good probable point of entry, however, the prevalent market circumstances at that point of time will have to be reconsidered.

A breach below 309 would be your cue to exit as it appears like a cliff fall below this support.

Regards,

Kavita Chamaria 

BITCOIN - Technical Analysis

 Hello Readers,

Bitcoin analysis works with RSI range 40 to 70 on the daily chart, unlike the 30-60 level observed on stocks and indices.  In the chart below, we have analysed the daily chart to observe the price behavior when RSI successfully reverses from 40. Turns out, and also highlights on the chart, every time RSI on the Bitcoin Index has taken a support at 40, the price has rallied strongly. This establishes the fact that historically RSI has worked as a wonderfully reliable indicator in forecasting bitcoin rallies. 

Figure 1: Daily chart: Bitcoin (USD), captured on 8-Sept-2020

A closer look at the daily chart of Bitcoin shows that it recently broke below the support level of 10900. Few concerning observations are:

1) The breakdown happened against very high volumes (blue rectangle on the chart)

2) The breakdown took RSI below the level of 40 (blue circle)

The immediate support now is the red line indicating the 200 EMA level of 9000 which is historically and psychologically very important. 

Figure 2: Daily chart: Bitcoin (USD), captured on 8-Sept-2020

Re-adjusting our lense to look at the wider picture again, in order to determine what happens when RSI breaches below 40, we get the below picture (figure 3).

Every time RSI has gone below 40, price on Bitcoin Index has corrected more than 20%. That being said, not all corrections were a result of RSI breaching level 40 but all RSI breaches resulted in a heavy correction. 

The most recent data shows that RSI has already breached the level fo 40. This is a good indication of the correction which is bound to follow. The probable support on the chart is at 25% downside from the current level. The current level is $10,126 and strong support is at roughly $7500. 

It is best to look out for the level of 8900-9000, given its importance and in the event of a breach, brace for further slide.  

Figure 3: Daily chart: Bitcoin (USD), captured on 8-Sept-2020

  

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SBIN: Technical Analysis of an Upside Opportunity

Hi All,

Sharing a very detailed analysis of SBIN. I have covered the though process from the first look of the chart to the drawing the final conclusion of a probable run-up with 5 explanatory infographics. 

Follow this link for a downloadable PDF version of the analysis. 

Your comments below are welcome. 

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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!

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Balrampurchini- A successful analysis of a cyclical stock

 Here is the original post on Balrampur Chini (sugar stock) posted before the big sweet rally:

(click here >>>) Thursday, 23 August 2018 : Balrampur Chini: Bottom fishing (A study of range shift in RSI)

Balrampurchini Daily Chart captured on 24.08.2018

Regards,

Kavita 

Crude Oil Price Crash for Dummies

Hello Readers,

The recent crude oil price crash is second only to spread of the COVID-19 globally in panic terms. The base for almost all fuels, as we know, has lost nearly 50% from the high of $65 per barrel in last 3 months, of which, nearly 32% has been recorded in the past 5 trading days alone. Crude oil prices are falling like a rock under the influence of gravity.

Two questions come to my mind here-

1) Why?

2) Until where?

To answer the first question first, we know crude oil prices are determined by two primary forces- demand and supply.

On the demand front, China has ceased to be the primary manufacturer, favourite cuisine or  emerging world economy and garnered a new reputation as the epicentre of a pandemic. In the heart of all things that China was best known for, it was also the biggest consumer of crude oil, but come 2020 and the advent of the COVID-19, it has come to a standstill with visibly lower demands for crude as organisations have stop manufacturing operations and people have stopped travelling.

The impact of this is much larger than ever priced in any scenario analysis. The pandemic has touched nearly 115 countries. The globally cascading effect of the disease- operational shutdowns, travel bans- is bound to have a palpable negative impact on demand for crude oil.

Now, the logical solution in a situation of demand set back would be to cut production. However, what is adding oil to the fire here is the current supply flux. OPEC collapsing after the failure of negotiations between Saudi Arabia and Russia to cut production in the face of an already suffering demand paradigm came as a shock for the global trading community as witnessed via the price crash.

Moving on to the next question ’until when’.

The simple answer is- no one knows. However, what we can identify using techniques of technical analysis is a probable support level for WTI Crude Oil. But before that, let’s look at the daily and monthly price charts below.

On the daily price chart, the breach of an important ‘triple bottom’ support level of $42.20 last week, combined with a ‘runaway gap’ is a knell bell and a text book set up for further price decline. The slight bounce in price witnessed after the piercing fall is popularly known as a ‘dead cat bounce’. In simpler language, it means that the bounce has no credibility, it is only an acknowledgement of the knee jerk reaction witnessed in price.

However, if we take into consideration the monthly chart above, the current price crash does not look quite as bad as those witnessed in the past. In both the big fall we have witnessed so far (2008,2014), price has forged a lower high and a lower low at every turning point, thereby confirming a primary downtrend. By definition, the term ‘bear market’ is used when a script/index/future contract has lost more than 20%. However, we are playing with much bigger numbers and calling it a mere bear trend does not do justice to the scenario we are looking at. What is worth noting is that, during both the past price crashes, support came in at approximately 70% price decline from the last peak.

To conclude, having brought to attention similar instances of price crash that have happened till date and taking into consideration that the threat of this pandemic is as real as the financial crisis of 2008 and in fact more global in nature, the pain should at least be at par with the past incident, if not worse. This brings us to the end with a lingering question that would crude prices be driven to a range of $18 to $21PB?  The potential support range incidentally is also the only price support visible on the monthly chart which is below the triple bottom support that was breached earlier this week.

Thank you, for reading!

Regards,

Kavita Chamaria

Strong Accumulation Signals in Mothersumi suggest the beginning of a Strong Upside Rally!

Dear Reader,

Hello again!

The daily chart of Mothersumi is showing the beginning of  a new uptrend on the daily chart. Signs of accumulation are evident. The image below highlights the same.

Mothersumi on 13.06.19 showing accumulation signs

This is a very basic set-up often observed at the beginning of a strong uptrend. The big cats are buying the stock and hence the swell in volumes.

Mothersumi was an all time favourite of investors until the dawn of Electric vehicles brought its twilight. The stock has corrected almost 60% over the past 18 months from the high of Rs. 260.
Currently, the first resistance lies at level Rs.128. A sustained closing above this level would mean a confirmation of the uptrend trend. Accumulating the stock at this level is an opportunity rarely spotted!

Another positive is my favourite RSI positive divergence at the bottom. It is evident in the above chat (not highlighted) that when the price marked the low of Rs. 113, the RSI did not forge a corresponding low but took a support at the level of 30 indication a positive underlying momentum.
This combination of positive divergence in RSI and accumulation in volume is a pretty sure shot way of identifying stocks in the early stage of an uptrend.

Mothersumi is a great company with a top class management team. Following this article I will continue to share the news updates and subtle changes which reinforce/oppose this bullish view.

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Bottoming out formation in BIRLACORP. CMP-Rs.555, Headed for Rs. 680+

BIRLACORP has bottomed out in the charts. I have been following this stock since Rs. 452. 1) The beautiful RSI positive divergence near the bottom was the first indication of a bottom after RSI went oversold. Usually such signals help identify horses for long term. The last time one such signal turned up was in the charts of Balrampurchini.

2) The formation of higher lows is another indication of an uptrend forming. The stock has moved up almost 10% in the last two trading sessions alone.

3) Another positive factor is that the volume picks up during uptrend in the stock.

4) RSI has also undergone range shift and is oscillating in the range of 70-40 instead of 60-sub 30 levels.

5)Pitching for early target of 680, this stock held the support of 491 very strongly during the correctionary phase before spurting ahead in last two sessions.

REC Ltd follow up- 34% return and counting

Hello Readers:

Since the first post on REC Ltd (HERE) the stock has return over 34%. It touched Rs155 recently. I am sharing below a quick update on the call.

Please share you feedback/queries if any

Email: kchamaria1993@gmail.com

Rec Ltd. Weekly chart. After a strong rally, a temporary correction may now ensue before continuation. 

Nifty 50 Analysis: Drawing a plan of action

Dear Readers,

With the festive season behind us and the elections ahead, the market is in a lull state. Many are talking about 'action' coming back as elections draw closer and given that, it is only prudent to have a plan of action ready.

I have presented the hourly chart of Nifty50 below for analysis, but before we begin I would like to draw your attention to the indicator I have primarily used for this analysis.

Over the past few months, I have figured a new moving average about which you will not have heard anywhere else. This exponential moving average is exceptionally long, but works beautifully on daily and hourly and even shorter time frame charts. The 600 EMA is 3x longer and 3x smoother than our favorite 200 EMA, and if you listen to me, this will soon be your 3x favourite too. You can use the 600EMA label to search my blog for other posts mentioning this magical moving average and deciding the effectiveness of this underrated moving average for yourself. 

Coming to Nifty now. In the chart attached below, the red arrows are clearly marking the resistance which the 600EMA  has posed for Nifty on every rally. The one instance when the 600 EMA was breached was apparently an instance of a fake breakout. The ascending triangle visible on the chart is capped by 600EMA and upward trendline is providing it support. This is a classic ascending triangle. Now this is a continuation pattern. 

The market as I see it now is quite weak. The first support has been touched. A sustained breach of 10770 on closing basis would take the index to 10540 and also mean failure of the pattern which will lay the ground for deeper correction. I am betting on the failure. 

However, if the pattern succeeds, then on the event of a strong upmove above the 10870 level , with a closing on the daily chart , a proper throw back and subsequent continuation should take Nifty up to 11750 again. 

Nifty Hourly chart, captured on 10-01-2019

That is from my side on Nifty. Please do share your outlook on the index and the general direction of the market. I have been bearish since 11700 level. I was bearish at 10600 also and I will continue to be bearish till nifty does not break the 10000 level!

Disclaimer: I am holding a Nifty JAN 10300 Put. 

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That's all for today! Adios!