Have been doing a lot of trading in BHEL lately, mainly cos the price hit 52wk low in recent times and is trying to go back up. Many investment firms have downgraded their rating on BHEL, to something between bad and moderate (in layman terms). But personally, I see the price of BHEL going places once the market decides to stabilize, hence my persistence with this....
Took a 14% profit today, going for a long position first, followed by a short position when the market really started going downhill.....
Was very cautious initially, cos the price was moving up even though NIFTY was going lower....I was pretty sure that this up trend wouldn't last long if the NIFTY continued on a downtrend. I also knew that if the NIFTY trend reversed, BHEL would move upward at a strong pace.....
1) Waited for a confirmation of price action trend, before entering the trade. The first three green candles at the start of the day had already cut the upper BB line, followed by a red candle and subsequently the EMA-2-high returned into the BB band. The MACD was slowing down and the RSI was heading downward....everything showing a clear downtrend.
I waited for the price to cut the centerline of the BB band before taking any position. It never did, it dropped a little then started an uptrend again making a higher high and a higher low. At this point the NIFTY was also going sideways....
I took a long position at 123.50, ignoring the MACD, happy with the RSI movement and Columbus's BB band method. My stop loss was 123, which was the low of the green candle before this.....
2) The price action cut the upper BB line, signalling my exit, at 125.50 with a 4% profit. The RSI had also peaked and gone above 80, with no clear signal from the MACD. Given that two indicators signalled an exit, the RSI and BB band, i exited the long position.
This price action was well against the NIFTY trend, which does not happen too often. I was not looking to take a short position in BHEL, if the opportunity arose or another long position.
2)-3): Between these points, the price initially moved up, then started going down. No clear indication which direction it was heading. The MACD did a crossover twice in a short period, which was very confusing. The RSI was showing a clear downtrend, but that is EOD, in the live trade it was acting funny.
One indication of a downtrend was when the price hit 125.45 three times and did not break it, as shown by the bracket. The next candle, after the bracket, broke the center BB line, indicating that the price might be going down.
3) This candle had opened below the BB centerline, the MACD and RSI also at this stage were indicating a downtrend, nice entry point for a short position.
Took a short position at 124.50 with a stop loss at 125.45.
I was looking for a target of 119 to square off.....with trailing stop losses at 124, 123, 122 as shown by the red lines.
3)-4): The price action broke the bottom BB line many times, but with the NIFTY dropping, I was confident that BHEL wasnt going anywhere. Also, the price was contained between the two lower BB band lines, keeping it safe and cozy on its downward trend.
There was a mild scare towards the end when the price broke the center BB line. By then I did not care even if it hit my stop loss, since I would have come out with at least 5%~7% profit anyway.
4) I always get a little panicky near 15:00, cos the price is capable of doing funny things near the closing time. Whatever the position, I always look to square off and get out before 15:00 and close all open positions.
The price action went as low as 119.10 and it was nearly 15:00. I could have waited and it would have hit my target of 119 for sure, but I chickened out and exited the position at 119.50....with a profit of 10%.
Buy Entry: 123.50
Stop Loss: 123
Buy Exit: 125.50
Sell Entry Point: 124.50
Stop Loss: 125.45
T/L SL: 124, 123, 122,
Sell Exit: 119.50
As always, the BB band theory worked like a charm. :thumb:
P.S: Last few weeks were crazy busy. Will have more time now for these posts and analysis :clap:
