Connect with us

Hi, what are you looking for?

Stocks

Some Classical Technical Developments Shaping Up As Volatile Markets Gets Selective

The ghost of the Hindenburg Report continues to haunt the Indian stock markets; the markets have witnessed a sharp selloff over the past two sessions after the activist short-seller leveled some serious allegations against the Adani Group. While Hindenburg Research specializes in “forensic financial research”, they have accused the Adani Group of serious financial wrongdoings, massive stock price manipulation, and running an accounting fraud scheme for decades.

Over and above this, the markets will also face the Union Budget 2023 which is scheduled to be tabled on Wednesday, February 01. The volatility is expected to rule the roost and we will see the markets in general going all over the places and stay highly volatile through the coming week.

Amid this uncertain and volatile environment, some components from the broader markets are showing resilience and some signs of a potential bottom in place, and some possibility of a technical pullback. Such setups would work even better with low beta stocks that are overall less volatile. Such as this retail stock that is seen laying the ground for a potential technical pullback from the current levels.

Trent Ltd (TRENT.IN)

TRENT.IN marked its high near 1500 levels in August last year; after a brief consolidation, the stock attempted to take out that level in November. However, after marking an incremental high near 1550, the attempted breakout failed. The stock not only came off from the highs below the breakout point, but it also slipped further into corrective decline. The subsequent price action post the failed attempt to break out also resulted in the formation of a complex Head & Shoulders pattern. Subsequently, the stock declined and while completing its price measurement downside target, it tested the zone of 1150-1160 recently. Overall, the stock has relatively underperformed the broader markets over the past months.

The most recent price action has shown an emergence of a strong bullish divergence of the RSI against the price. While the price marked lower bottoms, the RSI did not; this led to the formation of a bullish divergence against the price. Besides this, RSI also shows a classical bullish failure swing. RSI slipped below 30, it bounced back but retraced again. However, it did not mark a new low and bounced back above the previous high point resulting in a bullish failure swing.

MACD has shown a positive crossover; it is now bullish and trades above the signal line. The stock has also rolled inside the improving quadrant; this hints at a likely beginning of the phase of relative outperformance of the stock over the coming days. The stock has rolled inside the improving quadrant of the Relative Rotation Graph (RRG). This hints at a potential beginning of phase of relative outperformance of the stock against the benchmark which in this case is the broader NIFTY500 index.

If the stock stages a technical pullback, it has the potential to 1290 levels. This would translate into a potential price appreciation of 8% to 10% from the current levels. Any close 1110 would negate this view.

Foram Chheda, CMT

and

Milan Vaishnav, CMT, MSTA | Consulting Technical Analyst | www.EquityResearch.asia | www.ChartWizard.ae

    You May Also Like

    Politics

    When George Santos mentioned his family during his congressional campaign, the New York Republican often reflected on the work ethic and strength of his...

    Business

    Two of Sam Bankman-Fried’s top business partners — a co-founder of the cryptocurrency exchange FTX and the former CEO of the hedge fund Alameda...

    Sports

    Kicker Alejandro Mata is following former Tigers coach Deion Sanders to Colorado. ‘Thankful to be committed and signed to the University of Colorado,’ Marta wrote on...

    Stocks

    SPX Monitoring Purposes: Sold long SPX 1/27/23 at 4070.56 = Gain 6.51%; Long on 12/20/22 at 3821.62. The top window is the cumulative GDX...

    Disclaimer: SecretCharts.com, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

    Copyright © 2024 SecretCharts.com | All Rights Reserved