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Stocks

Tech Note: BHEL Does Well, Look For Gap Traverse. ACC Might Set Up

In a post on August 23, I wrote about a setup I saw in BHEL which seemed to follow a nice W pattern involving a lower bollinger reject and a potential move up.

BHEL Chart

 

And now, I’m going to show you where that went.

image

 

The gap now forms an area of resistance. Tomorrow (Sep 6) is when the stock’s dividend of Rs. 3.5 or so will be reduced from the price, so we will see a fall (of 3% just to make up for the dividend).

The future is at 133, but if we see big buying tomorrow as well, we will test the resistance (the lower bound of the gap, at Rs. 139). If it breaks 139, I expect it to go to 147, where the 50 DMA also resides.

I like these things were there are TWO different elements coinciding – the entry involved a bollinger band reject (a momentum change indicator) and a MACD cross (a trend indicator). An exit with a gap boundary and a DMA. These often give you very strong signals.

This setup has worked four times now, and I’ve only been noticing a few of them. Coming up on this angle is ACC, which needs to go to 970+ before it signals an entry.

ACC Chart

Technically this is where I should have booked out the trade, but I actually took it out way way earlier than I should have. I made a 5% profit, but I left nearly 25% more on the table! It was largely because I didn’t trust this system myself.

Disclosure: Long a small quantity just to see if the Gap will be filled.

More disclosure: I will keep trading very small just so that I keep myself updated, as I focus on the startup I build (which involves building stuff that helps people trade). So the 30% trade may still not make me a huge amount of money, really. I probably wouldn’t write about it if it did.

  • Santhanam says:

    Deepak,
    You generate nice,cool charts. Did you build the tools to generate these charts ?Which tools you use ?.

  • feltra says:

    Thanks Deepak ji… It’s also interesting to note that ACC’s MACD (histo) is encouraging on all 3 timeframes (daily, weekly, monthly). However for BHEL the daily has hit the top, so as you are saying in this RRajan fuelled upmove of the market, we have to see how much real buying is there.
    For “big buying tomorrow”, do you have any volume rules? Like 2X, 3X 20day average volume etc? Just curious to know.
    Also: “I probably wouldn’t write about it if it did.”…. LOL!

    • Thanks feltra ji!
      Yes ACC has an interesting setup and it’s been beaten up. About big, I’m not so much into volume right now but 2x average will be a strong sign. By Big I mean the scale of the move (3% or more); let’s see how it goes…

  • Viral Dholakia says:

    BHEL has turned up as per your expectation. But, now apart from hitting the upside Tasuki gap, BHEL has also surpassed the upper Bollinger band. Isn’t this a strong sound of resistance, apart from the one provided by the Tasuki gap?

  • Viral Dholakia says:

    Basically, ‘Tasuki’ Gap is nothing but the Japanese terminology for the Gap resistance/support phenomenon, according to candlestick chart pattern.