VITAFOAM: Stock is trading upwards as swings are twisting up


Monday, January 11, 2016 08.30 AM / Harish Shahi, The Analyst 

A closer look on the daily chart of VITAFOAM reveals that earlier stock is falling down and making successive lower lows and lower highs. The bears are driving the car and in full control on the accelerator.

It seems the bears are beating the bulls black and blue and dominating them at every nook and corner. Stock declined from N6.50 to N4.40 level but after arriving at N4.50 level, we saw seen some panic reaction from the bulls and bulls have made the fantastic counter attack.

A rounding top pattern has been formed on the daily technical chart which is providing strength to the bears as they are moving down with a balanced demand and supply which was limited to N4.50 level.

Recently swings are twisting up and trend has changing at an initial level. The recent buying has added power to the bulls and negates the chance of the bears. Some correction can’t be ruled out but that should be again a time to buy.

From technical perspective, we observed bullish divergence of RSI indicator on the daily technical chart, which is providing bullish signal at an initial level. If it sustains above N5.50 then it will signal further presence of buyers and will provide more strength to the bulls; this could trigger acceleration to the upside with N6.50 as next target.

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

To View Technical and Interactive Chart with Indicators like MACD, RSI, Stochastic, Moving Average, Bollinger, Williams %R, MFI ... Click HERE

What Next?
An engulfing candlestick followed by bullish marabuzo candlestick is providing bullish signal. A bullish crossover on MACD indicator is also favoring the bulls. Both RSI and CCI indicators are providing bullish signal from a positive territory.

Intraday bias remains bullish on the stock as long as N4.50 level remains intact. The N6.40 level is key resistance level followed by N7.00 while N4.60 can be considered as key support level followed by N4.00 level.


Trade Idea:
Based on the charts and explanation above, traders and investors can buy at N5.25 for the target price of N6.40 level and N7.00 level with strict stop loss of N4.60 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


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To View Technical and Interactive Chart with Indicators like MACD, RSI, Stochastic, Moving Average, Bollinger, Williams %R, MFI ... Click HERE

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