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
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
