I have a quick post today on another stock which is making a buzz already. The big investors are already in on this for their share of this hot cake retailer chain. I am talking about Future Retail!
Besides the hot-shot stories spinning out (Read more here) for Future Retail’s stock, the technical indications are also riding strong. It appears to be starting of the next big up-leg in the stock.
Let’s look at the cluster of evidences closely.
FRETAIL\’s stock has been in a consolidation for nearly a year now. During this period, the stock has found consistent and strong support at the level of ~470 and resistance at ~640. Going by that alone, the stock has decently taken support at the said level and turned higher making its path to the first resistance zone of 640.
Having established that stock is heading higher, lets establish why I think this move is a sustainable move. Two answers: 1) The Break-Away-Gap 2) Strong Volume on the Gap day
The gap up is a significant move here because the prices has been resisting the trio of 35,50 and 100 EMAs indicated by the blue, purple and red lines on the chart respectively. The gap not only let the price break out of this consolidation but also let it surpass above this cluster of moving averages. Now for those who are confused, moving averages are trailing averages of the past price data and pose as good support/resistance zones and also as lagged indicators of price movements. (Read more here) The occurrence of this gap with a strong display of volume (you will notice a tall green bar at the bottom of the chart) shows that there is active buying interest in this stock.
I am not laying down any potential target level for FRETAIL because I look at it as a long term opportunity unlike Balrampur Chini which was more like a medium term bet with a mere 100% rally outcome as per my study.
Let\’s also update you on how our Balrampur Chini analysis is doing.
The first post on this stock was posted on the 24th of Aug (Friday). After the post, at around 2:00 PM the stock was seen giving a strong run-up and closing +5% up. In the last two days the stock has been resisting the 100 EMA and as mentioned in the post on Friday, we continue to watch out for a breakout to confirm our analysis.
That\’s all from my end!
As a disclaimer, this isn\’t a stock recommendation but a mere observation of a great phenomenon unfolding on the chart. Another disclaimer: I am not long on Fretail but long on Balrampur Chini. A warning: Anyone investing in either stocks based on this article will be doing so at their own risk. Please be responsible. The above observation is purely technical. Anyone with a fundamental insight on either stocks is invited to share the same, we can put up a collaborated article ( no pay for that :p). You can reach me at firstname.lastname@example.org for the analysis of other stocks (NSE, NYSE, LSE as long as there is a chart), commodities or currencies, I will try my best to respond. Until next time, Adios! 😀