We are reproducing chart of Kotak Bank. Most of the private banks are out performing the market. HDC bank is trading at life time high and so is Axis Bank, but Kotak Bank is not showing signs of strength.
It is evident from the chart that it has found support at 200 EMA after falling from intermediate top of 820 made on 08-03-10. Its 200 EMA is at 717 . The are around 700-710 is also a historical support area. Oscillating indicator Stochastics is also at oversold position.
Now lets us discuss about possibilities:
A- The stock may breakout from this channel on the upside , in larger time frame it can be considered as bullish flag.The breakout area is about 750 . It means if the stock is able to trade above 750 with good volume its correction will get over and it may retest its intermediate high of 820.Given the present market conditions this seems to be the likely case.
B- stock may not breakout from this channel and may remain sideways.It may not fall below 200 EMA .
C- It may break below 200 EMA and if this happens then the stock may remain in bearish .
As a trader you must plan for your trade .We have created three possible scenes.
In our trading life we have often experienced the fourth possibility . We went long with breakout but stock came crushing down took our stop of close below 200 EMA , traded a while below 200 EMA then surged up and hit the target we mentioned the possibility of scene A.
This what trading and traders life is all about. We learn our lessons take our loss , write it down in our trading journal and move ahead in search of our next trade.
Lets see what happens with this trade.
Have fun and trade well.
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