Apr 102011

Last week, TCS hit new life time high on Tuesday but by the end of the week the stock closed under the previous high of 1220. The chart below is the weekly chart of TCS showing a 'gravestone doji'  formation suggesting supply is starting to over-power demand. The bottom panel also shows momentum diverging negatively with the price movement.

TCS - Weekly Chart

Drilling down to it's daily chart, it is quite clear that when TCS clocked new highs, there was not any significant volume expansion. The stock was not able to sustain above it's previous high of 1220 for more than a day and has continued to move lower. This price action is looking more like a head-fake rather than a true breakout. Now, if you are a conservative trader, you can wait for the breach of 1125 to book out longs and reverse direction. An aggressive approach would be to turn bearish below last week's low of 1184 with a stop placement above 1220 or 1247.

 Posted by at 4:52 pm  Tagged with:

  4 Responses to “TCS – Break out or shake out?”

  1. Absoultely agree !!

  2. hello sir good to see your article for long time.sir any good book to understand price action trading.as people talk a lot.still i am following the trend to enter and exit the trades as you said
    thanks in advance

  3. Zubair,

    The market is the greatest teacher – learn from it live -no book or seminar is going to give you that education. Keep your capital SMALL, keep a log book/journal for your trades, the losing trades are your gems – dissect them and learn what went wrong and NEVER REPEAT that mistake. Soon you will be left with little or no mistake to commit. Once you have read Martin Pring’s Technical Analysis Explained or Technical Anlaysis of Finanical Markets by John Murphy – your foundation is in place, it is up to you to build your own method on top of it.

    Hope that helped.

  4. thank you sir

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