Monday, May 06, 2013

DLF - Technical Update

  1. The whole point of technical analysis is to find low risk opportunities to profit from.
  2. Now there is no one single thing or person which can tell us when it is the right time to buy or sell a stock. But we can gather enough evidence for a possibility if we use the right tools the RIGHT way!
  3. So what do we have on our hand in DLF. First of all I am not sure where this counter is headed, up or down, but that cannot stop us from exploiting a good trading opportunity, lets gather the "evidence" now.
  4. The weekly chart above romances the possibility of a Cup and Handle bottoming pattern.
  5. The later part of the saucer pattern takes the shape of a triangle, which broke out on 14th Jan and got resisted at the 200 WEMA. The breakout have since then, consolidated and is testing the upper channel boundary of the triangle, just where the triangle boundaries are intersecting.
  6. The volume also shows favorable characteristic for a bottom.

  1. The daily chart sports two recognizable patterns, one completed and another in process.
  2. The first is a rising wedge, which was followed by a sharp fall. The sharp fall has now halted at an important support zone (fibo confluence zone).
  3. The important question is what is in store next.
  4. There is a triangle forming just above the support zone, which has held the prices twice before, and we are currently testing the same support zone again.
  5. Now what makes this price juncture interesting, is its proximity to the important support zone. A bullish position at this juncture, would be a low risk bet, and a breakdown below this important support zone will be a clear signal for a bigger fall.
  6. The OS RSI reading on the daily chart suggests a bounce, all we have to do now is to watch our trading systems closely for a signal. above the support zone, I would take all buy signals, and if prices trade below it, I would like to play this counter from the sell side.
Important point here is that I have tried to delineate the bullish and bearish zone for this counter. A trader should benefit in a way, that, he can confidently trust buy signals in bull zone, and sell signals in bear zone, with tight and clear risk management.

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