BAJAJ ELECTRICALS : SMALLCAP STOCK TO WATCH 0UT FOR !!

BAJAJ ELECTRICALS: MULTI MONTH DESCENDING CHANNEL BREAKOUT !!

This stock has witnessed a tremendous rally from Feb 2016 - April 2018. The stock saw a whopping northward move that period rallying almost from 150 to 700 approximately. That is an extremely strong move and definitely would have been cheerful for investors and traders 

Post a sharp up move, stock price topped out in late April 2018 and thereafter every rally in stock was sold into. The downtrend continued for almost more than 2 years. The stock started forming Lower highs and Lower lows formations which determine a bearish phase in the stock. 

In the bearish phase stock erased more than 75% of the gains which it had delivered in the bullish period. The stock almost plunged to the level of 250 from 700 levels. The stock made a bottom in April 2020 and post that stock has started forming Higher highs and Higher lows which signals a bullish trend in stock price.

From the chart attached below, it is evident that how price beautifully traded in Descending parallel channel when the price was in bears grip. The price made a bottom exactly at the lower end of the channel and thereafter a sharp rally which lead to gave a breakout from the long Descending channel which hints for a trend reversal in price action.

The breakout from the Descending channel was supported with volumes that provide further confirmation in price action. Also, the rally which took placed from the bottom has been well supported by volumes. The volumes bars size started to increases with increases in price which hints for a strong and genuine rally.

Recently, the stock witnessed a healthy correction in price which lost almost 100 points from the swing peak. The important point to note hear is, the volumes have been below average compared to prior bars which signal exit or profit-booking by retailers and big hands are still in the game.

The stock price has been trading above all major moving averages which suggest bullish trend in stock trend and dips towards the support shall be utilized as a buying opportunity.

Currently stock has placed near its previous horizontal resistance area (450 - 430) which also compliments with intermediate upsloping trendline support (Around 420-425). 

Following price action and volumes and other technical tools price has the potential to scale higher towards 540-610-700 in the medium term.

The above view holds true until the price does not close below 400 levels. The strong support is visible around 460 - 424 levels.

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Disc. The above-shared analysis is solely my view as per my understanding and knowledge and for educational purposes. I will not be responsible for any loss or gain incurred.