After opening flat, Gruh Finance plummeted 18.5% on intraday basis amid a panic-driven sell-off in housing finance stocks. But, it found huge buying interest at lower levels as it managed to close 2.2% higher. It has been consolidating since the last three months, facing resistance at its all-time high of Rs 382.00.
An area on a chart that turns back a stock’s advance is called resistance. Therefore, a pivot point is a type of resistance level. A stock corrects, forms a bottom and then builds the right side of its base. As it nears the old peak, a stock often hits resistance and moves sideways or lower for a few days or weeks. This action forms the handle. A stock breaks out when it shoots above the high of the handle, which is called the pivot point.
JSW Steel advanced 2.4% on above-average volume in today’s session to scale a new high. Steel producers found favor in today’s session as the Indian government is considering raising steel import duty to 15% from the current rates of 5–12.5%, in a bid to curb rupee depreciation and address trade balance issues. The stock has advanced 20% from its pivot price of Rs 346.50.
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The Significance of Common Chart Patterns – MarketSmith India Webinar covers the following:
• General Market Direction
• Why Chart Patterns Work
• Right Time to Buy
• Incorporate Chart Pattern Analysis Into Your Routine
You want to buy a strong stock as soon as it breaks out of a sound base. The closer you get to the pivot or buy point, the less likely you’ll be shaken out by a momentary pullback. Most winning stocks rarely drop more than 8% below a proper buy point. Avoid buying stocks extended more than 5% from their pivot. Should you spot a stock too late, keep an eye on it. Many leading stocks will fall back near their buy points, offering investors a second chance to climb aboard.
