ONGC is one of my favorite stocks; this stock is often used by the operators for Index management when RIL is under stress. I have been repeating often for any rally in Nifty to be sustainable the KING (RIL) has to show the moves. So far RIL has only shown signs of stress and ONGC has been shouldering the responsibility of carrying NIFTY to a certain extent, but now I feel ONGC needs to rest and take a breather. A very quick analysis I will do and see if I can come out with some logic behind by thoughts.
The Weekly Picture:
A nice inverse H&S on the weekly, signaling a breakout above, 1135/50 on sustainable basis. The flip side is that the price is way above the value area (the MA’s) so if already missed the train, no point in getting in now, better to wait for retracement back to the value zone. Also noticeable is the decrease in volumes, ONGC is looking to go back and retest 1040 and 1000 to cement its position.
The Daily Drama:
Here also we can see that the price has reached its logical target the upper channel line and now looks to retrace to its values zone between 1040/50. There is a negative divergence building in the MACD histogram. Another noticeable thing is that we have a very steep up trend line (drawn in pink) which is unlikely to hold. A break of this trend line doesn’t mean a change in trend (that will only happen if we trade below 950), it can just mean some sideways consolidation and making of a shallower and a stronger trend line.
The Hourly Break:
Here also we see that the price has retraced after touching the upper channel line, making a multiple top. A huge negative divergence I MACD histogram, though the MA’s suggest a support at 1070 but real support is in the form of the two converging trend lines at 1040!
Below is the RS chart, see the blue line in the lower pane, that’s the RS line of ONGC vis a vis Nifty. This line has been rising since June, see the gradient of the trend line on the RS, it looks unsustainable and hinting that in the near future ONGC needs to pause for a while.
Am I bearish on ONGC? Nope I won’t short it here but would rather look to enter this beauty on retracement.
4 comments:
It is not a inverse H&S but you are seeing H$S pattern.
But, H&S is not valid because Left shoulder has less volume than head and Right Shoulder!
If you check with Fast MACD, you will see a immediate divergence on Daily chart! I think ONGC will correct soon
One more thing if you adjust your trendline drawn on daily chart
Currently between Jan 2008 Top and May 2008
Re draw to
Jan 2008 top to Sept 2008 Top
AND
Lower side JAN 2008 Bottom & July 2008 Bottom
you will see ONGC is now clearly inside a downward channel and current rally was rally inside the channel!
m4h Hi
Appreciate your comments, but please do read the post carefully, I had clearly mentioned ONGC retracing and correcting!!! Secondly as regards to your other comment on Nifty Post regarding DT, there also I have clearly mentioned they don't qualify as Dt's but multiple tops!
Regards
Brother Great Work done by you. Hats Off. Keep it up.
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