Reliance Capital: Fibonacci Retracements, Projection and Complex Correction

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From the below Daily chart of Reliance Capital one can observe that prices are moving in a range of 390-295. This stock is moving in this 100 pts range from past 11 months and it seems that this is going to continue for further months.

Reliance Capital has been in news from some time but it has always underperformed despite of issuing banking license, issuing the banking license is still a myth but the stock started correcting especially after making a high of 407 on 9th December 2013 when Nifty made a high of 6415, thereafter it started moving down till its lower extreme of the range and made a low of 304 on 28th February 2014.

What is the next move for this ADAG stock? By using Elliott wave Analysis we came to the conclusion that this high beta stock is on the brink to complete its basing formation and can start to outperform very soon.

We are aware that prices has given a bullish break in falling red channel pattern which is visible on the charts, we are also aware that there is a positive divergence which is marked by blue line. All this factors suggests that the trend is changing from negative to positive.

We have also used Retracements and Projections to find out the possible target for this stock. Wave b of the second correction has taken the support of 80% Fibonacci retracement of the previous up move (289-407). Which clearly suggests that wave b of the second correction is in flat pattern. By knowing which pattern it has formed now it is easy to forecast the future price for this stock by using Fibonacci projections.

By applying this, resistance zone comes to around 377-380 levels for this stock which is very near to its upper extreme of the range which is 390 levels.

Combining Elliott wave analysis and Fibonacci Retracements and Projections it is always easy to find out the desired target or resistance zone for a particular asset class. It is advisable not to follow the crowd blindly, but use objective techniques.


Relaince Capital Daily Chart


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