Last Updated on Mar 14, 2023 by Gayathri Ravi
Global markets turned jittery after SVB Financial Group updates. Things seem scary, but markets have been directionless for many months now, and stock-specific opportunities are arising. One such counter is Shapoorji Pallonji Group, where Reliance New Energy has a 40% stake in Sterling and Wilson Renewable Energy Ltd (SW Solar). Let’s dive deep into the different charts and understand the price formations.
Table of Contents
Weekly: Price action
Since listing, the prices have clearly been down. The most recent formation of the last year shows sideways behaviour. For the first time, the whole sideways consolidation seems to be coming to an end. The first breakout of the yellow trendline is confirmed with volume. The final breakout of the whole downtrend is to be seen in the time to come.
Weekly: Price action
If we just focus on the most recent price action, the price saw a squeezing formation, making a falling wedge pattern, whereas the past week saw a volume-supportive breakout. The reliability of this pattern is very high, and one can certainly consider this counter for positional trade.
From the extremely low price of 2020, if the peak of mid of 2021 is considered, the recent correction halted somewhere near 61.8% Fibonacci retracement. But if the last swing from the low of June 2021 to the peak is considered, the price halted exactly on 88.6% retracement. Both the retracement levels coincide with each other, along with the trendline support, which is highlighted in yellow colour. This inflexion zone of 250 mark can be the best support for the counter from the long-term perspective.
The Relative Strength Indicator (RSI) is a momentum indicator which confirms the strength of price action in its past 14 periods. With the price breakout, RSI is reaching the overbought area of 70, confirming really good strength on the price action. One can consider this counter for positional trade and accumulate on the dip.
Moving Average Convergence Divergence (MACD) is a lagging indicator and confirms the trend at different stages. One such confirmation is when MACD crossover is followed by zero line crossover. Here on the chart, we can see MACD has decisively crossed the zero line, and the gap between indicator lines is widening, which confirms the trend change with strength. Being a lagging indicator, MACD confirms the trend a little late but with more reliability.
Ichimoku is an equilibrium trend-following indicator. There are many ways by which you can confirm the signals. On the present formations, Tenkan – Kijun crossover is on the cards, and the price has also entered the Kumo cloud. There seems to be more space on the upside till the 375-380 zone. Kindly note that this indicator is also a trend-following indicator, and Zoom confirms the trend a little late.
Supertrend is a simple trend-following indicator. Since the inception of the price action, this indicator has given sizeable trending opportunities. The present price action breakout coincides with the supertrend indicator, confirming trend reversal. Perfect candidate for buy-on-dip strategy.
Daily: Price action with Ichimoku
Massive curve formation can be identified on the daily timeframe chart. Interestingly, volumes almost always supported the move whenever the price bounced higher. The present bounce is getting confirmed with volumes, bullish Tenkan – Kijun crossover, bullish future Kumo cloud and Chikou span in free sky. All observations confirm the short-term bullishness.
Putting it all together
Looking at price action on the weekly chart with a falling wedge breakout with multiple coinciding supports from Fibonacci levels, strong RSI, strong MACD crossover of zero line, Supertrend crossover, and the price entering Kumo cloud on the weekly chart are all confirming bullish days ahead for the counter. One can consider this from a long-term perspective and accumulate on the decline for a better risk-reward ratio.
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 on the counter. Prefer to take the advice of your financial advisor before initiating any position.
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