Cairn India Ltd - May Drill Good Returns !!!

After hitting the 2 years high at 386, stock price of CAIRN INDIA is moving in downtrend from last 6 months. The current downtrend seems exhausted as stock has reached to the strong demand zone of 255 – 265 levels and Momentum Oscillator RSI is also approaching oversold territory on the weekly chart. A series of ‘positive divergence’ of RSI can be clearly seen in daily chart. If we meticulously observe the prices, we are witnessing emergence of a harmonic pattern named as ‘Bullish AB=CD Pattern’. Here, after the fall from 386 (A point) to 304.10 (B point), price has made the high of 344.40 (C point), which is 50% retracement level of the fall (AB). After that stock is falling and reached to 266 levels (D point), which is near 200% retracement of BC, thus fulfilling all the criteria of ‘Bullish AB=CD pattern’. Apart from that, 100% projection of ‘AB’ from ‘Point C’ is also placed at 263 levels, which shows the symmetry of the pattern is perfect. Since ‘CD’ wave is slower than ‘AB’ wave, chances of trend reversal is high. Thus, one can buy this stock at current levels (262) and on dips to Rs 258 for a target price of Rs 302 - 318. Stoploss for the trade should be placed below 253 levels on closing basis.

Divis Lab Ltd - Striving for Leadership through Chemistry !!!

After making the all-time high of 1888.05, stock price of Divis Lab Ltd has corrected by merely 10% in last week. The trend and momentum is still bullish in the stock as ‘Higher Top Higher Bottom’ formation is still intact and Momentum Oscillator RSI is taking support at 60 levels in weekly chart. At current juncture, we are observing ‘positive reversal’ of RSI in both daily and weekly chart, suggesting a sharp rally on cards.

Yesterday, we have witnessed ‘inside bar’ in daily chart and the narrowest candle in last seven trading sessions (which is known as NR7). The NR7 is a reversal pattern on either side, depending on the following price action. Since Momentum Oscillators and Averages are positively placed, we are expecting upward rally in upcoming days. One can buy this stock on confirmation above Rs 1747 for a target price of Rs 1875 - 1930. Stoploss for the trade should be placed below 1699 levels.

IDFC Ltd

The stock price of IDFC Ltd is trading in a strong uptrend in weekly chart by preserving ‘Higher Highs Higher Lows’ formation. The ongoing upmove seems to be a copy book ‘Impulse and Corrective Rally’ which led the stock to bounce back sharply from some or the other Fibonacci retracement levels.  The best part of this rally is that it is not a vertical rally, which always tends to fizzle out on profit booking (generally a “V” shape rally is followed by a sharp sell-off too). We are also observing the formation of ‘Inverse Head and Shoulder’ pattern in weekly chart, whose neckline is placed at 166 levels. 

Looking at the daily chart, stock price is moving in sideways direction after hitting the 52 weeks high of 166.65. Recently, Stock has given very strong buy signal by sustaining above the ‘rounding formation’ which is made in past seven weeks. On Monday, stock has retested the neckline of the rounding pattern, which also coincides with ’10 Days EMA’, and bounced back piercingly; thus completed three days corrective pattern. Momentum Oscillator RSI is positively placed and has taken support of the breakout trendline in daily chart.  One can buy this stock at current market price of Rs 155 and on dips to Rs 153 for a target price of Rs 176 – 187. Stoploss for the trade should be placed below 149 levels.