Last Updated on Dec 15, 2022 by Anjali Chourasiya
The markets are near an all-time high, and most of the counters have started picking up well. Many counters have started off lately and are still offering amazing positional opportunities. Among those counters, one counter is Indiabulls Housing Finance. Let’s go through all the different charts and understand the structure.
Table of Contents
Monthly: Time cycle
Since inception, it is seen that the counter is respecting 26 bars cycle. As per their cycle, the counter seems to have bottomed out a couple of months back itself. The recent bottom is near the previously made bottom and supports the view of a limited downside.
Weekly: Price and volume
After the decisive fall of the counter from the extreme highs of 2018, there was a minor bounce from the lows of 2020. The bottom of 2020 showed extreme volumes near the lows. After the bounce price came back to the same level again, halted at the level and started reversal. Too early to comment on it, but the price seems to be forming a double bottom, which is a bullish formation.
Weekly: RSI
As per the historical data, whenever the Relative Strength Indicator (RSI) comes out of extreme lows, the price generally continues for a longer duration on the upside. Recently also, RSI came out of the oversold zone and is now above 50, inching higher, confirming the good strength in the price.
Weekly: MACD
Moving Average Convergence Divergence (MACD) is a lagging indicator. It confirms the trend of emergence. There are multiple ways of looking at the MACD indicators. One is the MACD crossover, which is confirmed in the present situation. Another is a zero-line crossover, which is almost on the cards. On the confirmation, the uptrend will get confirmed.
Weekly: Ichimoku
Ichimoku is a trend-following indicator. This is an amazing indicator to be followed for trend following approach. The price, after the recent bounce, halted right on Kumo Cloud. However, the trend is still negative so far, as the price is still below the Kumo cloud. But if the price enters the cloud zone, it would challenge the downtrend. The first reversal sign of the Tenkan – Kijun crossover is confirmed. Interesting times ahead for the stock : )
Weekly: Bollinger Bands
Bollinger Bands are used by traders for short to mid-term trades. But an interesting way to use it is to check when the trend emerges. Squeezing bands is the first sign that a trend (either up or down) is about to emerge. As the candle gets plotted outside the band, it would confirm the direction of the trend. As seen on the chart, the price is about to get plotted on the higher side & will then confirm the uptrend.
Daily chart
Sideways consolidation breakout with good volumes on the daily chart along with strong RSI (near 70) and price above Ichimoku cloud are add-ons. So many positives on the daily chart confirm even short-term positives for the counter.
Ratio chart 1
Indiabulls Housing Finance Vs Can Fin Homes ratio chart is clearly showing a downtrend, but the formation is of a falling wedge with bullish RSI divergence. Also, the last move shows a breakout, confirming the likely outperformance of IndiaBulls Housing Finance above Can Fin Homes.
Ratio Chart 2
The ratio chart of Indiabulls Housing Finance Vs PNB Housing Finance is also weak. But it has shown sideways consolidation near lows for six months. With RSI above 50, the ratio chart may show an uptick, and confirms IndiaBulls Housing Finance’s outperformance over PNB Housing Finance.
Ratio Chart 3
Indiabulls Housing Finance has clearly been a laggard among all its peers. But falling wedge formation with bullish RSI Divergence highlights possibilities of outperformance of Indiabulls Housing Finance over LIC Housing Finance.
Putting all together
Looking at the monthly cycle of 26 bars, RSI, MACD, Bollinger Bands, and Ichimoku, along with double bottom formation on weekly charts and positives on the daily charts, the downside for the counter looks minimum. The ratio charts of Indiabulls Housing Finance with Can Fin Homes, PNB Housing Finance and LIC Housing Finance also show the possibilities of outperformance in the future.
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 on the counter. Prefer to take the advice of your financial advisor before initiating any position.
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