Hindalco: A channelized downtrend near completion!!!

By Waves Strategy Advisors, For more information visit www.wavesstrategy.com To subscribe to daily equity research “The Financial Waves” write to helpdesk@wavesstrategy.com or call on +91 9920422202 / +91 22 28831358

Hindalco is one of the classic example of a channelized move on down side. 

This article will help our readers how to initiate trades with the help of combining simple technical analysis like channels which played a significant role in determining support and resistances and Elliot wave counts in this stock.

The following excerpt is been picked from our report “The Financial Waves STU” published on5^th April 2013. Where we had shown how Hindalco respected the downward sloping channel and moved lower till 88 after making a top near 135.

Hindalco Daily chart:

Wave Analysis:

As seen in daily chart, after forming a distribution pattern near 135 levels prices failed to move above it and started moving down breaking its previous lows within the big red channel. Recently this stock faced the resistance of the upper trend line of the channel on 3^rd April and moved lower.

As per wave perspective, after completing wave C at 135 levels, prices are moving lower in double zigzag pattern and is currently in wave ….. of the second correction. This indicates that the downtrend is in later stages and should complete around … levels after which the upside correction of the entire down move from 135 to current levels can start. However for now the bias is negative as long as …… is intact on upside.

Following is more from the same report:

“An interesting observation is that in current fall Smallcap and Midcap sectors have managed to stay above the lows made on 28^th March 2013. We have been looking at many of the stocks like ADAG group – Rcap, Rcom, Rpower, Metal stocks like Tatasteel, HIndalco, Banking stocks like IDBI, ICICIBank, Capital goods like BHEL, LT. All of these stocks were the leaders on downside and started the down move even before the top was evident near 6110 on Nifty. Currently each of these stocks including NSE- Midcap index shown below has managed to stay above the previous lows. This indicates a positive divergence.”

Not only Hindalco but many other stocks and Nifty itself is at inflexion point!

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