We all know that price generally moves in two phases- Contraction and Expansion. Setups like rectangle, Flag or Triangles generally represent contraction. The stock squeezes in these narrow setups and then jumps on to the next phase that is Expansion. Expansions are generally strong impulsive moves in the direction of the most recent trend in the background.
CYIENT has been consolidating in a narrow range of almost 100 points- structurally known as Flag in technical analysis terms (see chart). This is contraction and the possible next phase could be an Expansion. This hypothesis can be further confirmed by two more facts.
🚀The stock has been taking support near October 2021 highs. A previous resistance zone has the tendency to act as a support, and it is acting like one. The stock moved from almost 1100 to around 1400 (rounded) and now consolidating for a further move,
🚀Secondly, the Relative Strength Index has been showing divergence. Which means that as the stock was making lower lows in April, the RSI was having higher lows. This positive divergence is good and often leads to a rally or reversal in stocks.
In this backdrop, I am expecting a break of Flag on the upside and a rally to its immediate breakdown area, that is 1650. Since the stock is still in an overall bearish structure, we can't expect new highs anytime sooner. The stoploss for such trades go underneath the Flag.
This is not a recommendation.
Please apply you due diligence or consult your financial advisor.
Do like/comment for more ideas in future.
Regards.
CYIENT has been consolidating in a narrow range of almost 100 points- structurally known as Flag in technical analysis terms (see chart). This is contraction and the possible next phase could be an Expansion. This hypothesis can be further confirmed by two more facts.
🚀The stock has been taking support near October 2021 highs. A previous resistance zone has the tendency to act as a support, and it is acting like one. The stock moved from almost 1100 to around 1400 (rounded) and now consolidating for a further move,
🚀Secondly, the Relative Strength Index has been showing divergence. Which means that as the stock was making lower lows in April, the RSI was having higher lows. This positive divergence is good and often leads to a rally or reversal in stocks.
In this backdrop, I am expecting a break of Flag on the upside and a rally to its immediate breakdown area, that is 1650. Since the stock is still in an overall bearish structure, we can't expect new highs anytime sooner. The stoploss for such trades go underneath the Flag.
This is not a recommendation.
Please apply you due diligence or consult your financial advisor.
Do like/comment for more ideas in future.
Regards.
Trade active
This is how the target for a bullish flag is calculated.
We measure the move from A to B- the pole and then add this number to the breakout level to get the target.
Also, this target touches a breakdown area and a gap. So, exiting near those levels would be perfect.
But firstly, wait for a flag break on the upside to enter.
JJ Singh
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Moderator, TradingView
🚀Join t.me/jjsingh_2020 ,
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Trader/Investor
Moderator, TradingView
🚀Join t.me/jjsingh_2020 ,
A Free Education channel
🚀Tweet at twitter.com/JaySingh_2020
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
JJ Singh
Trader/Investor
Moderator, TradingView
🚀Join t.me/jjsingh_2020 ,
A Free Education channel
🚀Tweet at twitter.com/JaySingh_2020
Trader/Investor
Moderator, TradingView
🚀Join t.me/jjsingh_2020 ,
A Free Education channel
🚀Tweet at twitter.com/JaySingh_2020
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.