20110323 CIPLA
Sustained downtrend since early Jan '11. The downtrend line is a significant one as the price has tested it around five different times on this daily chart. During the downtrend, the MACD has shown a nice Class A positive divergence.
With that said, the price has broken out the Resistance of downtrend line only today with a 3%Vol>VolMA5. Even though today's volume is meagre for a valid breakout.
Let's check out the history of volume
On Fri, 18th: Vol 63.2% > Vol MA 5 with a price change of -1.7%
On Tue, 22nd: Vol 61.8% > Vol MA 5 with a price change of 1.3%
On Wed, 23rd: Vol 3.7% > Vol MA 5 with a price change of 4.2%
With higher volumes on down days, one would expect the price to keep moving on the same direction. However, 22nd and 23rd's combined price and volume action has resulted in making a new HH during this downtrend.
RSI's downtrend line got broken out during Feb end and it has formed a double top around 50 levels with the price continuing it's down move. As Alexander Elder classifies this as an insignificant C class divergence, what is to be noted here is that the RSI testing the 50 levels for a break out. Once this break out occurs, it can safely be assumed that bulls are interested in this scrip.
With the price breaking out the downtrend line with low volume, we can expect the price to retest the downtrend for a Support. If the price holds above 310 levels (Previous pivot High), we can expect the 325 levels (38.2% fib retracement level of the current fall) in the very near future.
Sustained downtrend since early Jan '11. The downtrend line is a significant one as the price has tested it around five different times on this daily chart. During the downtrend, the MACD has shown a nice Class A positive divergence.
With that said, the price has broken out the Resistance of downtrend line only today with a 3%Vol>VolMA5. Even though today's volume is meagre for a valid breakout.
Let's check out the history of volume
On Fri, 18th: Vol 63.2% > Vol MA 5 with a price change of -1.7%
On Tue, 22nd: Vol 61.8% > Vol MA 5 with a price change of 1.3%
On Wed, 23rd: Vol 3.7% > Vol MA 5 with a price change of 4.2%
With higher volumes on down days, one would expect the price to keep moving on the same direction. However, 22nd and 23rd's combined price and volume action has resulted in making a new HH during this downtrend.
RSI's downtrend line got broken out during Feb end and it has formed a double top around 50 levels with the price continuing it's down move. As Alexander Elder classifies this as an insignificant C class divergence, what is to be noted here is that the RSI testing the 50 levels for a break out. Once this break out occurs, it can safely be assumed that bulls are interested in this scrip.
With the price breaking out the downtrend line with low volume, we can expect the price to retest the downtrend for a Support. If the price holds above 310 levels (Previous pivot High), we can expect the 325 levels (38.2% fib retracement level of the current fall) in the very near future.
Last edited:
1156 cmp HOD 
