Friday, June 26 2015 02.25 AM / Harish Shahi, The Analyst
A closer look at the daily chart of TRANSCORP reveals many whipsaws where both the bulls and bears are leading at their own time. Thus, giving a fantastic rally and selloff; in other words buying and selling opportunities. By looking at the daily technical chart we observed that the stock has completed a rounding top pattern recently and after testing the N2.70 support level it bounced back towards an upside.
Three consecutive reversal candlesticks like- Hammer, dragonfly doji and bullish marabuzo candlesticks have been posted on the chart which is indicating that the trend has changed now and bulls are controlling the game and leading for the time being. Well it’s an early signal and we will get further bullish confirmation if bulls manage to sustain above N3.00 level i.e. above the moving averages.
Short term to intermediate trend is down so in a downtrend market always wait for a trend reversal signal; and here we have seen strong trend reversal signal so investors are advised to buy this stock. Investors and traders are displaying bullish tendency towards the stock for the time being.
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A double bottom price pattern on the daily chart is raising the bullish sentiments and few consecutive reversal candlesticks –hammer, dragon fly and bullish marabuzo are favoring the bulls for the reversal signals.
RSI and CCI both are providing trend reversal signal from oversold territory so we may see some trend reversal signal. A bullish crossover on MACD indicator is the recent development for buyers. Intraday bias remains bearish on the stock as long as N2.40 level remains intact. The N3.40 level is key resistance level followed by N3.80 whereas N2.40 can be considered as a key support level followed by N2.20 level.
Based on the charts and explanation above, traders and investors can go for buy at N2.90 for the target of N3.40 and N3.80 level with the stop loss of N2.60. 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
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