BAJAJ AUTO HAS BEEN ON STRONG BULLISH MOVE FROM 30-JULY-2019 TO 01-NOVEMBER-2019. AFTER THAT STOCK FAILED TO CONTINUE BULLISH RUN AND FORMED DOUBLE TOP FORMATION BEFORE INR 3300 PSYCHOLOGICAL ROUND FIGURE MARK. AS WE KNOW DOUBLE TOP IS BEARISH REVERSAL SIGNAL. MORE OVER INR 3100 LEVEL WHICH HAS BEEN STRONG RESISTANCE MANY TIME IN PAST ON DAILY TIME FRAME, STOCK GOT SUPPORT AT "V" OF DOUBLE TOP RIGHT AT THAT INR 3100 LEVEL. STOCK BROKE THAT SUPPORT LEVEL OF INR 3100 ON 3RD JANUARY, 2020 AND NOW IN PRESENT TRADING AT THAT SAME INR 3100 LEVEL. AS WE ALL KNOW PAST SUPPORT BECOMES FUTURE RESISTANCE LEVEL, WE CAN LOOK TO ENTER SELL BAJAJ AUTO ON TWO WAYS.
1) AGGRESSIVE APPROACH: ENTER ON BREAK AND CLOSE BELOW DAILY CANDLE FROM NOW AND STOP AT 0.618 RETRACEMENT OF RECENT SWING LOW, WITH TARGET AROUND INR 2875 LEVEL WHICH IS ALSO AB=CD PATTERN.
2) CONSERVATIVE APPROACH: WAIT FOR PRISE TO RETRACE UPTO 0.618 OF RECENT SWING (SECOND TOP TO MOST RECENT LOW) AROUND INR 3177 MARK OR WAIT FOR RSI TO GO OVER BOUGHT AND FROM THERE LOOK TO ENTRY REASON ON LOWER TIME FRAME. WITH STOP LOSS AROUND INR 3305 LEVEL WITH TARGET OF INR 2875.
WHICHEVER APPROCH WE SELECT BOTH HAVE MORE THAN 1:2 RISK REWARD RATIO. ALTERNATIVELY TRADER CAN TAKE BOTH POSITIONS, IF AGGRESSIVE ENTRY GETS STOPPED OUT CONSERVATIVE ENTRY TRADE WILL GIVE ENOUGH PROFIT TO COVER THAT LOSS.
1) AGGRESSIVE APPROACH: ENTER ON BREAK AND CLOSE BELOW DAILY CANDLE FROM NOW AND STOP AT 0.618 RETRACEMENT OF RECENT SWING LOW, WITH TARGET AROUND INR 2875 LEVEL WHICH IS ALSO AB=CD PATTERN.
2) CONSERVATIVE APPROACH: WAIT FOR PRISE TO RETRACE UPTO 0.618 OF RECENT SWING (SECOND TOP TO MOST RECENT LOW) AROUND INR 3177 MARK OR WAIT FOR RSI TO GO OVER BOUGHT AND FROM THERE LOOK TO ENTRY REASON ON LOWER TIME FRAME. WITH STOP LOSS AROUND INR 3305 LEVEL WITH TARGET OF INR 2875.
WHICHEVER APPROCH WE SELECT BOTH HAVE MORE THAN 1:2 RISK REWARD RATIO. ALTERNATIVELY TRADER CAN TAKE BOTH POSITIONS, IF AGGRESSIVE ENTRY GETS STOPPED OUT CONSERVATIVE ENTRY TRADE WILL GIVE ENOUGH PROFIT TO COVER THAT LOSS.