Resistance Tested Over Multiple Times, Stock Ready to Give Sharp Move!

Support and resistance structure the actual premise of technical analysis. At the point when a stock crosses a key resistance level, it is normal to give a further potential gain move. Yet, not all resistance levels are significant so how would you view as the significant one? Indeed, the straightforward rule is the more a level gets tried by the stock, the more vital that level becomes.

In straightforward words, a stock turning back from resistance multiple times makes that level more significant when contrasted with a level that was tried just two times. Merchants ought to keep such stocks on the watchlist that are trying their help or resistance levels regularly, as unbelievable these levels gives the stock a high likelihood of a proceeded with move that way.

One stock has come on my radar that is giving all that it must clear an obstacle yet has bombed like clockwork, consequently, making it an ideal contender for a sharp convention when the stock takes off over this opposition. The organization is Muthoot Money Restricted (NS: MUTT ) which is an INR 41,468 crores huge customer finance organization and exchanges at a P/E proportion of 10.32.

The stock had tested a resistance zone of INR 1,055 - INR 1,060 more than 10 times in 44 trading sessions. Now that’s something! It’s rare to see a stock turning from a level with such a high frequency in a relatively short span of time. What does it depict? It is showing that bulls are trying very hard to take the stock above this resistance zone, but the intense supply from bears at this level is wasting every effort the bulls are making. However, none of the sides are willing to give up, making the stock go nowhere for a long time. 

This makes the level of INR 1060 a very important hurdle and if the stock crosses this level and is able to close above it, preferably on a weekly chart, then a very sharp rally could be seen thereafter. If you ignore the V-shaped move in September 2022, then the volatility of the stock would be seen at quite a low level which is another ingredient for a sharp move. Although, it cannot be said in advance when the stock would spurt past this level, whenever it does, it could be a cheerful move for the bulls. Hence, keeping this stock on the radar is a no-brainer for momentum traders.