Here are my stock trade/set-up explanations with charts!
About 80% of retail investors lose money when trading stocks. This massive challenge is yet to be solved in the purview of retail investors despite numerous FinTech advancements. There exists an enormous gap between financial literacy and portfolio returns.
Trade Executed: 29-April-2022
Company: HDFC Bank Ltd
Stock Ticker: HDFCBANK
HDFC BANK is about 20% lower than its all-time-high price of INR 1725, according to the WIBE momentum dashboard. HDFC Bank is ranked 385 on stock momentum based on technical indicators — meaning 384 stocks perform better than HDFC Bank. Daily volume was almost equal to the ten days average volume.
From 2021 to 2022, the stock ranged from INR 1375 to INR 1600. The current stock price at INR 1384 has strong support, yet the stock trades below 200 EMA.
Let’s look at the charts — Technical Analysis:
HDFC BANK is trading about 6.35% below the 200 EMA.
I am expecting two possible scenarios here:
- The stock will rise to at least 200 EMA, where we can pocket approx a 6% gain from the current market price (or)
- The stock gains further momentum from the market participants; it may reach up to the next resistance of about INR 1557
Assuming the momentum continues, with a risk to reward ratio of 2.5 (stop-loss at 5%), I am expecting an upside potential of about 12.5%
Caveat: In general, I prefer not to trade any stock whose price is below the 200 EMA and when the WIBE rank is more than 250 (for swing trading). I believe the market participants are reacting to the HDFC-HDFC Bank merger.
The volumes are also increasing consistently, indicating active market participation.
With a Risk/Reward at 2.5 and a respective stop-loss at about 5%, I believe HDFC Bank offers an opportunity with an upside potential of about 6% ~ 12%.
Caution: The trade setup is yet to be confirmed, and that shall happen only when the MACD and RSI confirm by bullish crossovers. It is worth waiting for the next trading day to ensure the bullish crossovers confirm the trade setup.
With a Risk/Reward of 2.5, a respective stop-loss at about 5%, I believe HDFC Bank offers an opportunity with an upside potential of about 6% to 12%. I will continue to ride the swing until the WIBE indicator becomes Bearish. At any point in time, due to market volatility, if the WIBE indicator turns bearish or the stop-loss activates, I will exit the trade and continue to look for another opportunity.
Note: Markets are highly volatile and, thus, trade with caution. Keep a close watch on trade positions and do not exceed the number of positions. At any given point in time, I will limit the active positions to a maximum of 10. Do not forget to tighten your stop loss as the stock moves up with momentum.
I hope you liked the trade explanation.
Do your due diligence if or when placing a trade. All ideas stated here are my own and do not represent trading or investment advice.
Disclaimer: This is not a buy/sell recommendation and is shared for information & knowledge only. The author is not a professional (or) qualified investor, and the articles are not investment advice or a recommendation or advice of any sort. All the analysis/data are from the public domain, like, but not limited to, Yahoo Finance, Google Finance, and Investing.com. Consult your financial planner for any investing decisions. This article is not a paid promotion, and the expression in this article is solely the author’s research & analysis. While anyone can give a stock “BUY” recommendation, investors must have a strategy and know when to “SELL” a position. Do your due diligence before trade execution, and everything is at your own risk.