RELIANCE! Will It Tango???

I have been often mentioning that for Nifty to dance, RIL needs to do a SING(H)! Let’s do a quick review of RIL and see if we can come with something.

A brief dekko at the hourly chart below, the price is at the value area or as some like to mention it as sweet spot/zone (between the two MA’s). Breakout is above 2168, which on hourly is the resistance provided by the falling trend line marked in solid red, Hourly target is the upper channel line at 2195 and then 2200/05.

The daily chart below has now two successive inside days. The previous Big Red bar high (2168) and low (2052) are clear levels for both longs and shorts and can also serve as conservative stops depending on which side of the trade you are. RIL on break of 2168 is likely to find resistance at the EMA’s (2190/95). Above that the roadmap should be 2220 and 2270.

Having said this I am real skeptical of RIL as of now and I have a reason; the reason is the chart below. This a RS chart of RIL, the main window has line charts of both the NIFTY (Red Line) and RIL (Green Line), the bottom pane has the RS line of RIL vis a vis Nifty. As you can see that the RS line has broken to the downside from the triangle. RIL is just not showing strength and without RIL, NIFTY just can’t move much. While you are at it, please look at the RS chart carefully, and see why it is a very important tool, in a trader’s arsenal. If you follow RS charts then you will find that RS line more often gives breakout signals well ahead of the Price. A caveat here, remember that a Falling RS doesn’t mean that the Scrip is technically weak (for that you need to study the charts), it just means that the said scrip is now underperforming the Index and it is time now to take out your money and employ it on some other scrip.