Why most of us want to catch a "flying arrow" or "falling knife"?
On 7th of January,one of my FB friends wanted to short Adani Enterprises and although he was not happy with my reply, I think my detailed answer to him at that point in time would help all those who wish to understand multi-timeframe analysis. So I am reproducing my reply here:
" I think Adani Enterprises is in Uptrend and we should buy it on dips. Why I think so it explained in Charts below.
Weekly Chart:
Daily Chart:
75min Chart:
Those who want to short it may do so on the basis of 75 min chart only in 208-210 zone with SL above 213.2 and target below 197
Now what happened the next day?
As shown in the chart above,price went below 197 and gave a perfect positive-divergence set-up for going long. At the same time,it annulled the earlier set-up of going short at 208-210 zone for targets below 197 as the targets of sub-197 got done with appearance of positive divergence that indicated end of pull-back in strongly uptrending stock.
And on 17.1.2020 EOD it looked like this:
Moral of the story: Swings are to be played in the Direction of the Larger Trend
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