As a first of its kind, I have started a YouTube channel to discuss all things related to Technical Analysis. In the playlist Let's Get Technical I will share with you on-screen analysis of stocks, indices, chart patterns, indicators. Everything will mostly be related to Indian equity market and from a technical analysis view point.
The first video is now online! You can watch this on-screen analysis of the Stock Idea ZYDUSLIFE and determine whether you wish to Subscribe to my channel EXP-Invest . Once we reach the milestone of 1000 subscribers, every Friday we will do LIVE Q&A sessions to answer your stock queries and discuss about the Market.
The four evidences spoken about on the weekly chart of ZYDUSLIFE are:
1) Trendline support- As per past trends, this stock is close to a major support trendline. In the past, this trendline was where the stock found support after massive declines and bounced up as high as 5-6 times of its base price!
2) Volume- In the last upside we notice the volume profile has been very strong. Usually when a stock is nearing the end of its trend, a decline in volume is noted. This decline in volume is noticeable close to the end of the current downside which appears to be losing momentum.
3) RSI positive divergence - Speaking of momentum, the RSI (Relative Strength Indicator) is a momentum indicator and it is showing a positive divergence. This means that the price is doing better than itself compared to the last 14 days and it has been doing so progressively over the last many days.
4) Price trend- The most important and last evidence is the occurrence of higher-highs and higher-lows. In the last peak the price managed to cross above the highest price peak and in the ongoing correction, so far, has not breached the previous low.
Many analysts prefer to wait for the correction to end and confirmed reversal before calling it a bottom. However, that can lead to a much worse risk to reward ratio. In the stock market the objective is not to have zero loss making trades, because let's be honest, that is impossible. However, taking adequate calculated risk to make the most of opportunities based on sound rationale and minimising the losses if that rationale fails, makes all the difference.
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