Some times opportunities rest precisely in place, where it’s quite uncommon for traders to notice, recent movement in Multi commodity exchange or shortly referred as MCX is an example of this. It‘s obvious to note that MCX is in long-term down trend, just scroll over to daily time frame. The formation of down trend is from July 2015 and lost nearly 30%. By using price action analysis, uncovered some important information on the stock. As I have emphasized several time in my articles, Price action helps to stay ahead of the crowd.
MCX rebounded strongly from 750.000, indicating the strength of buying pressure. Bullish swings were much stronger than previous sell offs, and what’s more interesting is the fact; it’s even stronger than present bearish swing. Logically, Market tells us that sellers are losing momentum; it doesn’t mean the long-term trend will change the direction, but it’s a sign of prevailing strength in the stock.
Nonetheless sellers did regained control, when price action tested the resistance level 900.000, but the sell off was constantly interrupted by bulls. Strong shadows, rejection and large bullish candlesticks in between the selloff are justifying the fact. (Look at the MCX chart)
One important factor to take long-term down trend into consideration, as we can see it’s a strong down trend from the perspective of price action. The recent strength in buying pressure might be nothing more than a corrective retracement due to liquidation and profit taking from institutional investors. Traders should watch closely the support level 740.000 for indications of bearish breakout, and they should keep an eye on previous resistance level at 820.000 (trend line). Watch price action closely at these levels to get further conviction on market’s direction
