Last Updated on Mar 29, 2022 by Ayushi Mishra
This article is authored by Kunal Rambhia, a fund manager at The Streets, a private fund. He has been in the equity market since 2010, performing various roles such as Associate Research Analyst, Research Analyst, and Associate Portfolio Manager. He has media appearances with CNBC and ET NOW. Kunal is also a visiting faculty in multiple colleges.
Hello friends, unlocking theme is the talk of the town and picking up momentum in the market. Herein I share my technical views on the counter – Delta Corp., which is in the gaming and casino business and certainly hot in the market. Kindly note that the charts used for write up are higher timeframe charts, and the technical view shared is positional.
Table of Contents
Monthly chart: time cycle
Since its inception, the stock has been well respecting the 24-period cycle on monthly charts (every period is of the month). That doesn’t mean that trend changes after 24 periods. But the cycle seems of 24 periods. In earlier years, the stock remained in a sideways consolidation, but the breakout came exactly at the end of the 24-period cycle. The ongoing month is the 24th month of the cycle. Looking at historical data, it is likely that stock may enter a new cycle of 24 periods from next month.
Weekly chart: price formations
Multiple observations on weekly price action are seen.
The first observation is the cycle of price action. Right from the low of May 2020 to the top of Sept 2021, the uptrend had 72 bars. Since then, the price went in sideways consolidation, which lasted for 24 bars. The relation between these cycles turned up 1/3.
The second observation is the white trendline which is made from the extreme lows. Price has just perfectly respected the same trendline, even when it remained in sideways consolidation. The most recent bounce also started from the same trendline support.
The third observation is on chart formations. Price continued uptrend and then entered sideways consolidation, forming flag formation. The last candle confirms the breakout of the same, opening the doors for the new rally.
The fourth observation is on the volume front. Before entering sideways consolidation, there were aggressive volumes observed on the chart. Sizeable volumes were observed a couple of times within consolidation. The final breakout of sideways consolidation came with the highest volume.
All observations support a bullish view on the counter.
Weekly chart: RSI
During this entire uptrend, RSI clearly remained above the 50 zone. The most recent bounce on price action came right from 50 levels itself (highlighted on the chart). The breakout candle also preceded RSI being at 50 and bouncing from there itself, confirming a strong uptrend.
Weekly chart: Ichimoku
The best expected set up on Ichimoku is seen on the chart, where Senkou Span A, Senkou Span B, Tenkan Sen, Kijun Sen and Chikou Span all are inching higher with positive cloud and Tenkan – Kijun crossover (certainly expected based on the previous view). This is a dream set up for any Ichimoku lover to pick up the counter 🙂
Weekly chart: Heikin Ashi
Heikin Ashi is a Japanese trend following technique. It’s a subject in itself, but briefly, the strength of the counter is confirmed based on the candle colour and shadow in the same direction of the move. The trend is considered to be “set” based on 2 candles of the same style, which are the last 2 candles on this technical set up. Hence, there is a bright possibility of trend continuation.
Putting it all together
Looking at cycle on a monthly chart since inception, trend continuation on the weekly chart with flag formation breakout in the last candle with volume support, with RSI bouncing from 50 zone, magical set up on Ichimoku indicator and trend continuation confirmation on Heikin Ashi chart are confirming bullishness on the counter is likely to emerge. As charts are higher time ones (Monthly and weekly), one needs to have a positional approach on the counter.
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, my client’s position and my relative’s position may be open at the counter. Prefer to take the advice of your financial advisor before initiating any position.
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