Science of Stock Price Action:
The stocks have a tendency to do the same thing again and again like holding certain support area. It keeps doing it for some period of time and then use that as a launch base to rally big.
Example: Asian Paints. Just see how stock first kept bouncing from 200 dma for months before taking off big.
Source: Chartalert.com
It’s quite amazing that Berger Paints stock too did the same thing.
Source: Chartalert.com
Indraprastha Gas: The stock formed a base at 150 dma and then took off.
Source: Chartalert.com
What Lesson can we learn?
If a stock keeps bouncing from a well defined moving average, then one can buy the stock with a hope that sooner or later stock will take off in a grand style.
Disclaimer – The state of the market notes is Deepak’s perspective on the market. The column is purely for educational purpose. Nothing contained herein is a solicitation to trade or a recommendation of a specific trade. By reading this publication you agree to make no trade relying in whole or in part on the comments of the writers