In the meanwhile, one stock which seems to be hammered out of proportion is DLF Limited. The relentless fall in the stock a few days ago prompted me to check whether sentiments have gone extreme - which they usually go.
The price movement for the past few days in the stock is suggesting a very strong possibility of an inverse head and shoulder formation - which is in fact a reversal pattern.
If this is true, the stock may take support near to 420-430 levels in order to create the second ('right') shoulder. The neckline break out is at 490/- and a break beyond this should give us a target of 590-600/- in the medium term.
Volumes (not shown in the chart) are also picking up heavily at these lower levels and rather than indicating selling pressure, they may actually be suggesting us 'accumulation'!
Keep this stock on your radar !
CA Rajiv D Khatlawala
3 comments:
Hi Rajiv,
Nice identification.
But, I differ with you on the neckline breakout level for DLF. In my opinion, it should be at 470/- and not at 490/- as mentioned in your write-up.
Am I right, Rajiv.
With Regards,
Praveen Shamain
Yes Praveen . the break out is earlier than indicated.
However I have taken the break out of the recent high as a reference point for neckline break out. Hence I have indicated a higher level....
Also if you notice I have estimated that a fall from yesterday's level may come in order to make the right shoulder. If prices stagnate near the right shoulder for a few days, then the neckline break out level too will change
Regards
Thanks for the clarification, Mr. Rajiv.
With Regards.
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