NESTLE: Accumulation at initial level with low participation


Wednesday, August 12 2015 08.30 AM / Harish Shahi, The Analyst 

A closer look on the daily chart of NESTLE reveals that stock was falling down and making successive lower lows and lower highs. The bears had taken charge from N1100 level to N825 level which is a strong key support level as it has received panic demand from this level earlier also. A very balanced demand and supply is going and a rounding bottom pattern is in the process of formation.

Yesterday we have seen a bid bullish signal at an initial level in the stock and it bounced above moving average which was the turning point for buyers. We can say that we can go for accumulation. The way it has reacted aggressively it seems that there is no more selling pressure and now bulls have taken the charge. Well this is an early buy call we will get further bullish signal above N900 level. If bull’s trades and settles above N900 level then it will open the way towards the N1100 level in short term.

There may be a lot of demand in the market and N850 continued to be a very strong support. The short term trend is down according to the daily swing chart, and momentum appears to be in favour of the upside. A sustained move above N900 will signal the presence of buyers and will provide more strength to the bulls; this could trigger acceleration to the upside with N1000 and N1100 next target. 

All odds are in favor of the bulls and indicating a bullish signal. Presently, stock is trading between the crossed major and minor EMA lines and candles are totally generating bullish signal. Both investors and traders are displaying bullish tendency towards the stock for the time being.

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What Next?
A morning star candlestick followed bullish marabuzo candlesticks are providing bullish signal. Both RSI and CCI indicators have reached a positive territory and generating bullish signal. A bullish crossover on the MACD indicator is also favoring the bulls.

Intraday bias remains bullish on the stock as long as N825 level remains intact. The N950 level is key resistance level followed by N1050 whereas N800 can be considered as key support level followed by N750 level.

Trade Idea:
Based on the charts and explanation above, traders and investors can buy at N865 level for the target price of N950 and N1050 level with the stop loss of N800 level.  The tentative time frame would be 8-10 days.

NB: Return on Investment based on trade idea above does not take cognizance of brokerage commission charges   

Related NEWS
Analyst Rates NESTLE UNDERPERFORM Records 24 Growth in Sales in H1 15 - Proshare


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