We are witnessing lots of volatility and whipsaws. There are signs of exhaustion and some of the stocks are punished on the basis of quarterly results.
How do we trade in this market? Keep volume low and do not buy breakouts , wait for the signs of strength.
Let us take an example of Escorts. You can see on the adjoining chart that after breaking out of the range of 105-109 with good volume it touched a new high and corrected with five down days. It made a high of 118.50 today. How do we trade this stock. If tomorrow it is able to trade above 119 then only it will show us strength
Today it has taken support at 20 DMA and oscillator are at oversold level and any uptick will see it turning up.
Escorts may resume its uptrend only when it trades above 119 with support of 108 with possible target of 133-150.
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