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Vedanta | Is it a Sign of Renewed Buying Interest or Climax

 Vedanta share prices at 200.00 level an important psychological point

Share prices of Multinational Metal and Mining firm, Vedanta gave a stellar performance on previous week. Stock value rallied from 165.00 to 200.00 per stake. Price action is trading around an important psychological level 200.00. Market participants will closely monitor the stock’s reaction at this level, it can affect the decision-making process of Institutional investors and traders which might have large impact on Vedanta share price.

When we observe the daily chart of Vedanta Ltd, we can notice that prices were in tight consolidation in the period of Aug – September. Beginning of October, market took out the resistance level 175.50 while eventually resulting in breakout. But the momentum, strength and structure of breakout casts some doubt in the validity of formation. Is the breakout driven by real buying interest or is it just a climax movement to test the psychological level 200.00? The structure of the breakout becomes more skeptical, when we look at 4 hr chart.

Breakout Formation in 4 hr chart of Vedanta Ltd

A Closer look at the breakout structure using 4 hr chart of Vedanta Ltd

First of all, there was a bull trap before the breakout formation and it means there are some smart money players working behind the moves to trap the weak hand traders. And, we can notice consistent price gaps and run away gaps on the breakout structure. Does it means, there is a liquidity drain or is it a sign of forcing small players to exit.

If there is real conviction of buyers behind the breakout, we need to see decent upswings on any corrective sell offs. Also the higher time frame support levels must be strong, if there is real demand in the stock. Any sign of sellers should be treated with caution


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About the Author:

Balaji is a Speculator, Investor and Trader (All in All!!!) and self published author. Trading in the Markets since decade, have seen more ups and downs along with institutional trader's lifestyle. He usually trades Nifty, Bank Nifty, Commodities, Futures cum Options around both Indian and global Markets. Balaji applies highly analytical and systematic Price Action strategies He blogs passionately about Trading strategies, Price Action Trading, Technical analysis, Macro events, Market setups, Financial and Economical topics. Apart from Trading and Blogging, Balaji also mentors aspiring Traders and Investors on becoming successful in highly competitive financial Markets.

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