Last Updated on Feb 8, 2022 by Aradhana Gotur
This article is authored by Kunal Rambhia, a fund manager at The Streets, a private fund. He has been in the equity market since 2010, performing various roles such as Associate Research Analyst, Research Analyst, and Associate Portfolio Manager. He has media appearances with CNBC and ET NOW. Kunal is also a visiting faculty in multiple colleges.
Herein I share my view on Apollo Hospitals. Multiple timeframe charts, multiple theories and observations make technical analysis so fascinating ☺
The stock saw a massive run-up from March 2020 to August 2020, turned up for almost 72 bars. Since then, the counter remained in a sideways consolidation for almost 24 bars. The time has turned up almost 1/3rd of the previous rally. This can so be labelled as time correction.
The emerged trend remains absolutely intact on the counter. Also, during the sideways consolidation, though the slope certainly changed, but the main trend and the most recent trend (forming higher tops and higher bottoms) highlighted using the yellow trendline, remained intact. In fact, the counter perfectly bounced from the support line, creating a hammer kind of formation, followed by one more bullish candle.
During this entire advance, when the price was clearly making higher tops and higher bottoms, RSI inched lower. But RSI has just perfectly been onto the trendline support of its own, confirming Hidden bullish divergence, which works well during a steady uptrend.
Though just by looking at the price, the trend can be confirmed, but even the Fibonacci ratio seems perfectly been placed. The correction of the first advance during the time correction halted at 61.8% and the second advance during the time correction halted at extreme 88.6%. The bullish candle after the first correction led to a new rally. Let’s keep our fingers crossed ☺
Let’s now look at a few interesting trending indicators of technical analysis studies.
Price advanced above the Kumo cloud during June – July 2020 and it entered the multi-month rally since then. Price decisively remained even above Tenkan Sen & Kijun Sen. As the price – Kumo difference was pretty high, a minor time correction is certainly welcome. The difference between the price and the cloud has been narrowed and the price is again showing strength. This set-up is offering the most favourable risk-reward ratio for longs on such growth stock.
The Super trend is an indicator that focuses on ATR of the counter alongside volatility. The super trend also offers support/resistance for a trending counter. The recent correction on the counter just halted on the super trend and the price bounced right from the super trend, supporting the trending view.
Looking at the lower timeframe chart (daily chart) now. Price seems to be forming a falling wedge. But the interesting part to note is there was a minor breakdown and recovery. That led to conclude that there is a possibility of a Bullish Wolfe wave formation. As per the basic theory, the counter may show 5,550 levels by March 2022. Though, kindly note that this is a predictive theory and observation is on the daily timeframe chart. One needs to remain flexible.
Putting it all together
Looking at the weekly chart trend with hidden RSI divergence, Ichimoku and super trend set up alongside possible bullish Wolfe wave formation on the daily chart, it seems that the counter seems to be getting ready for the next bullish rally. I look at this counter as the trending/growth counter and so adopting “buy on dip” strategy seems logical.
Statutory Disclosure: Kindly note that this update is only for educational purposes. It is safe to assume that my personal position, my fund’s position, my client’s position and my relative’s position may be open in the counter. Prefer to take the advice of your financial advisor before initiating any position.
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