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Last Updated : Dec 14, 2019 10:35 AM IST | Source: Moneycontrol.com

RSI Pull Back in Tinplate suggests buying opportunity

In case of Tinplate one should keep a stoploss around Rs 119 marks.

Moneycontrol Contributor @moneycontrolcom

Shabbir Kayyumi

RSI stands for Relative Strength Index. It is a momentous oscillator used to identify trend reversal. RSI was invented by Welles Wilder Jr. The default look-back period for RSI is 14, however, this can be lowered to increase sensitivity or raised to decrease sensitivity. RSI calculates the strength of a stock trend and helps to predict their reversals.

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Why Buy ‘The Tinplate Company of India?

There are a lot of trading strategies using RSI; below mentioned is one of the most popular among the trading community which involves buying after completing retracement for higher movement; however the support of another momentum oscillator stochastic can give additional support.

In last some days, RSI had given a breakout by trading above 50 levels from below and made a high of 81 then after it is trading lower or retracing towards centerline placed at 50 levels, this behaviour is called as ‘RSI PBB’ setup.

RSI PBB is pull back buy setup which indicates, once RSI turns its tail upside after taking support from the zone of Rs 45-55 levels, the target is previous swing high of RSI which was Rs 81 or previous swing high of prices (Rs 150). Currently, the Tinplate is going through this setup and we expect higher price movement towards previous high Rs 150-155 levels in coming days.

tinplate

Buy Signal

1. Recent RSI gave a breakout and published swing top around Rs 81 levels.
2. After marking high of Rs 81, RSI is retracing back towards mid-line standing around RS 50 marks.
3. Strong bullish candle formation around buying zone has given us confirmation of retracement complete and original trend begin.
4. Midterm moving average 50 DMA placed around Rs 127 levels defines mid-term trend is very well augur with bulls as prices are sustained and trading above it.

5. Decent volume participation while forming a bullish candle will also give additional confirmation.

Profit Booking:

Whenever price candle will be near previous swing high which is near RS 150-155 levels.

Stop Loss:

Entire bullish view negates on breaching of a swing low and one should exit from a long position. In the case of Tinplate, it is standing around Rs 119 marks.

Conclusion

We recommend buying The Tinplate Company of India around Rs 130-132 levels with a stop loss of Rs 119 for higher targets of Rs 150 and Rs 155 levels as indicated in the above chart.

 

The author is Head - Technical & Derivative Research, Narnolia Financial Advisors

Disclaimer: The views and investment tips expressed by investment experts on moneycontrol.com are his own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

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First Published on Dec 14, 2019 09:40 am
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