Reliance Stock stuck in Underperformance zone
The above Chart captures Reliance stock price movements between March 2015 and October 2015. It shows what Reliance stock had been doing since 2008 i.e. Going up and then collapsing dramatically. The move above had become a pattern with no clear indication of turnaround/real HOPE. Then came the change in October 2015
THE SEEDS OF TURNAROUND: Reliance stock rallied with a GAP UP in October 2015 (Fundamental Trigger).
Good earnings report in October 2015 resulted in Formation of Solid Base
What the earnings report did: Created a floor for the stock. Reliance stock after gap up pulled back - took support at the Gap floor twice before rallying to 2015 high. Then before the stock could break the resistance, the Markets overall got into severe correction mode (Jan 15-Feb 15 2016 time frame) and Reliance stock had to give up the gains but once again found a support near the Gap floor around the middle of Feb 2016. Once again Reliance stock bounced from that support level. The SEEDS of TURNAROUND put a strong floor for the stock. This behavior caught the attention of many.
The NEXT THING for the stock: How to knock Resistance
The stock needed a fundamental trigger and it came in form of this news.
Look at the time of the announcement: September 01 and Reliance broke out above the resistance zone of 1060-1080 around middle of September 2016
Now Reliance stock post this breakout has been pulling back retesting previous resistance as the support zone. If you can see in the chart below, there is certain pattern in the way stock is moving up
The Stars appear aligned for ultimate breakout in Reliance stock > 1150.
State of Reliance Investors pic.twitter.com/dDie3NLP8v
— Deepak Singh (@smarket) October 23, 2016
In markets, nothing is certain. All we can say at this point of time - it's looking good. The breakout in large cap delivers the amazing result. The objective of this article was to share how one should read charts from a fundamental standpoint applying Laws of Science of Stock Price Action
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Disclaimer – The state of the market notes is Deepak’s perspective on the market. The column is purely for educational purpose. Nothing contained herein is a solicitation to trade or a recommendation of a specific trade. By reading this publication you agree to make no trade relying in whole or in part on the comments of the writers