Reliance at Crucial Resistance
Reliance Industries over past couple of years has been traders delight (by moving in a parallel trend channel). Now it's near the upper end of the channel(850 levels). If breaks this it can move to 900 swiftly & there by pushing the index too above 5200-5250.
Reliance has 8.5% weight-age in NIFTY & 9.8% weight-age in SENSEX. The weight-ages keeps varying daily depending on the market cap. Lynch pin's move would go a long way in deciding where the Index moves.
Reliance Industries - 3 Years Weekly Chart
On Weekly Chart The Stock is knocking on the doors of 850 levels. A breach would bring in a fresh level of buying coming in. Also on Monthly Charts over past 3 months the stock is forming higher lows on each of the 3 monthly candles & looks unlikely to be breaching it. As the stock has come off a period of far underperformance.
In the near term the OI Data suggests that ITM Option writers are unwinding (Bullish for stock to move up). This is happening from last friday evening, continued today too.
Indicators: RSI is still below 50. A move above 50 would indicate strong uptrend would follow. Till then it can be considered as a corrective upmove.
MACD - Signal line is about to cross the Smoothner (Exponential Moving Average line). MACD is still below 0.
Bottom Line: Stock will be positive only on weekly close above 850 levels & if it can sustain that level. Then NIFTY too wont be making any new lows soon. Atleast for this stock worst seems over as long as its above its previous low of 720-730 levels.
Happy Trading / Investing. Would be glad to receive comments from all on the views expressed.
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