Reliance industries for short term trading:
Reliance industries didn’t perform well in last 1.5 years as it was struck in range, a negative breakout on the stock below 888 was confirmed on 17 June 2011 since then the stock has entered bearish zone and every pullback was considered as selling opportunity. We have discovered a trade setup on weekly chart that stock was facing some resistance near 888 – 900 zone. So short positions can be initiated on Reliance November Futures near 886 level for positional target as 863 level and a protective stop loss must be placed just above 905 level. This strategy is purely based on support and resistance principle, but to get better short entries traders must use indicators such as slow stochastic or RSI. Trade setup discussed here is based on November future contract, we wont recommend to take positions on options. Reliance November Futures were trading with premium of 5 points, one must stay cautious due to this premium.
If index heavy weight will resume bearish tone, nifty will also be in selling pressure than, some high risk traders can accumulate Nifty 5300 put options near 100 for targets as 130 and then 145, stop loss must be placed at 85 level.
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{ 2 comments… read them below or add one }
Well done sir, today (09.11.2011) Reliance made low of 861 and closed at 863
—– Bhalchandra
Very good tips.