Indian Stock Picks >> Indian Stock Pick -
Gujarat Alkalies
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Indian Stock Pick - Gujarat Alkalies (update on
08th Feb, 2005)
Our first profit target of Rs. 140.00 (as mentioned
below) was achieved on 07th Feb, 2005. If you were
unable to book profits at 140.00, it would be prudent to
keep your stoploss at 135.00.
Indian Stock Pick - Gujarat Alkalies (28th
January 2005)
This stock pick was
one of the BUY recommendation in our
Trend
Trading Picks Newsletter
Stocks generally go through two dominant phases: range
expansion & range contraction.
Range contraction is also referred to as
congestion or consolidation. It is a constricted price
are where the stock will trade for a period of time. A
good example of this is the symmetrical
triangle.
Range expansion occurs when stock prices move
dramatically in either direction (trends), after which
it often finds a new price level to establish another
range contraction.
Gujarat Alkalies as broken out of its
symmetrical (contracting) triangle pattern (range
contraction) which it
has been forming over the last five weeks to begin what
most likely seems to be a new intermediate uptrend
(range expansion).
Trading Recommendation
BUY now with a stoploss at 115.00 for a short to
intermediate term target of Rs. 140.00 - 145.00 and then
155.00 - 160.00.
This stock could face some resistance at 129.80,
131.40 & 136.00.
Symmetrical (contracting)
Triangles
Symmetrical triangles can be characterized as areas
of indecision. A market pauses and future direction is
questioned. Typically, the forces of supply and demand
at that moment are considered nearly equal. Attempts to
push higher are quickly met by selling, while dips are
seen as bargains. Each new lower top and higher bottom
becomes more shallow than the last, taking on the shape
of a sideways triangle. It's interesting to note that
there is a tendency for volume to diminish during this
period.
Eventually, this indecision is met with resolve and
usually explodes out of this formation (often on heavy
volume.) Research has shown that symmetrical triangles
overwhelmingly resolve themselves in the direction of
the trend.
With this in mind, symmetrical triangles in my opinion,
are great patterns to use and should be traded as
continuation patterns.
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