Stock : Reliance Communications
CMP : 435
Target : Atleast Rs400
Strategy : Long Above 20day EMA and short below 20 Day EMA
Reliance Communications is a nice counter to play in futures and options. One of the easy strategy to play in this
stock is to Go Long Above 20day EMA and short below 20 Day EMA. Which works well if you applies to the 6 month chart of RCOM.
In the 6 month chart of RCOM it is clearly visible that short the stock if the candle exactly falls below 20 day EMA and go long if the candle is exactly above 20 day EMA.
Click the above charts to get Enlarged
In case of strong downward momentum this stock often pullbacks upto 20 day EMA. Thrice in this month alone(as shown in Red arrows in the charts)
and offering nice position to short the stock for valubale returns. So keep your stop loss just above the 20 Day EMA which comes near to Rs450. Target should be extended atleast 400. The only negative factor to be considered is
the stock is currently in oversold condition as per figures from Slow Stocastic Indicators.
If you are are a Intraday player then it is good to go through the strategy before taking a trade in this counter.
Right now even if the stocks opens near 440- 445 it is good to short near the days high wihout any fear. Also the
counter is looking bearish due to the MTN call off and RIL- RCOM abitration process
What Open Interest Tells Us
No. of contracts
Turnover in lacs
Change in OI
Bearishness is observed from the open interest figures. As per General rules of Volume and Open Interest "Rising prices and a decline in open interest at a rate greater than the seasonal norm is bearish. This market condition develops because short covering and not fundamental demand is fueling the rising price trend. In these circumstances money is flowing out of the market. Consequently, when the short covering has run its course, prices will decline. "
Best to watch this counter if you want to learn some short selling stuff
Author – Marketcalls