Kunal Rambhia is a Fund Manager at The Streets (a private fund). He has been in the equity market since 2010, in various roles ranging from Associate Research Analyst, to Research Analyst and Associate Portfolio Manager. Kunal has media appearances on CNBC and ET NOW, and is a visiting faculty in multiple colleges.
Herein I share my views on Coal India on different timeframes. Kindly note that views are more on higher timeframe charts, which supports the positional approach.
Monthly Chart (price action with Reverse Fibonacci application)
Stock price movement is captured from 2011 onwards. Counter remained in a downtrend since 2015. But it has reversed exactly from the 1.618% reverse retracement on the monthly chart, confirming a possible decent bottom in place.
Weekly chart (price action with Volumes)
After a massive and consistent downfall, the price seems to be making a good base (consolidation) for more than 1.5 yrs with massive volume activity. Recently, for the first time during August 2021, the price came out of consolidation with huge volumes and confirmed the possible end of a downtrend.
Weekly chart with RSI
In the last one and a half years of consolidation, RSI seems to be forming higher tops and higher bottoms, which confirms accumulating strength. Also, RSI is trending well above 50 zones after hitting extreme highs, confirming accumulation by strong hands.
Weekly chart with Ichimoku
Ichimoku cloud continuously offered resistance to the counter for years. Of lately, after making long consolidation bottom, the counter broke above the cloud, took the support of the cloud and remained clearly above the same. That confirms the change in trend. Also, the future cloud is showing expected positivity going forward. Summing up on indicator, it shows trend change with add on strength.
Trendline is plotted right from the top of the chart. It offered perfect resistance till 2021. This trendline was of great importance as it lasted well for almost 6 yrs. Recently, the price broke above the resistance line, retested the breakout zone and is now showing a bullish candle. Formation in the recent price action is expending rising wedge, which is bullish in nature and confirming limited downside.
Putting it all together
After looking at the monthly extreme bottom on 161.8%, weekly Ichimoku and strength using RSI, price action, consolidation and price pattern, the downside seem limited on the counter. One can keep a check on the counter for sizeable upside.
Statutory Disclosure: Kindly note that this update is only for educational purposes. It is safe to assume that my personal position, my fund’s position and my clients’, as well as relatives and friends positions, may be open in the counter. It is better to take the advice of your financial adviser before initiating any position.
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