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India Stock Market Picks and Tips in Indian Shares will carry
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Indian Stock Pick - ITC Ltd. (12th December 2005)
This stock pick was
one of the BUY recommendation in our
Trend
Trading Picks Newsletter
ITC which had been moving in an upward trending
channel over the last two months has been recently
undergoing a sideways correction/consolidation (see
daily chart below).
The price action on the intra-day chart below indicates
that the stock has broken out of this consolidation (contracting
triangle pattern) to begin a new intermediate
uptrend.
Trading Recommendation
BUY now at or around the current market price of Rs.
137.00 with a stoploss at 132.00.
Profit Target
As ITC is moving in an upward channel pattern we expect
this stock to at least make the move to its upper
channel line for a minimum profit target of Rs. 150.00
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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