For the past one year Sunpharma stock has been rising consistently. And of late especially since the end of March 2021 till now the stock has been performing well. It rose from 575 levels to 720 levels in this period. Please see the 5-minute chart below.
Before the market opened this morning, I scanned the daily chart for significant Resistance zones near if any. I found a Resistance zone near 718 – 724 levels. The stock had closed at 698 yesterday.
In the 5-minute chart there were few bullish confirmations. A Bull Flag pattern was in place. RSI too was looking bullish. Positive Reversal is present in RSI. 6th May Resistance zone near 695 levels had become a support at the end of the Bull flag.
Additionally, we can see a close convergence of a weekly pivot ‘R2’ near 727.2 levels and daily pivot ‘R3’ near 726.65. A 25 point rise could not be ruled out. My plan was to go long for the day.
The stock opened with huge Green candle piercing the upper band of Flag pattern, took off nicely and made a high of 722.
In the background of huge Gap down open in Nifty 50, I was hell scared to take this trade. Nevertheless, the scrip gave the opportunity to enter at 704 levels. I just couldn’t muster enough guts to press buy button.
What about Nifty 50?
Nifty 50 index opened 160 points Gap down. After taking
support near 14775 in the opening candle, the index kept moving higher and
higher till 12:30 p.m. But in the latter half of the day, Nifty breached the lower
band of the channel to fall till 14800 levels. Finally the broader index closed
55 points higher for the day. Please refer the 5-minute chart of Nifty 50 below.
Lessons:
Self-Belief in the trading strategy is of utmost importance for a trader. I am learning this lesson the hard way.
Off hours price study will help big way. Along with those lessons learnt during off hours a trader must be ready to adjust to the challenging environment that the market throws each day.