This is one important case study as to why investors lose money in the stock market.
Now if you look at the chart, Here is what you see:
1. 32 Months of pure range-bound consolidation 2. Clearly defined support and resistance zones 3. Five months of consolidation at the resistance zone 4. A beautiful high-volume breakout followed by a retest. 5. This is one textbook setup for a long trade
So, We should go long here, right?
If I zoom out of the chart, Here is what you will see.
- We have a strong resistance zone sitting just above the breakout level. - The price took a strong rejection from the exact resistance zone.
Also, Observe the volatile consolidation zone that lasted almost 2 Years. That volatile zone may not be passed through in one instant.
What we investors do is draw conclusions based on partial data and predict the price action that is yet to come. What we fail to do is observe the previous price action in its entirety. Does that mean that GAIL will not rise in value, Absolutely not. It just means that the uncertainty it has on the charts for a mere 10% gain ( breakout to ATH Distance) is super high. The market is full of opportunities. Why invest in something that already has a foreseeable red flag?
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⚠️Disclaimer: We are not registered advisors. The views expressed here are merely personal opinions. Irrespective of the language used, Nothing mentioned here should be considered as advice or recommendation. Please consult with your financial advisors before making any investment decisions. Like everybody else, we too can be wrong at times ✌🏻
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Resistance from ATH!
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Observe how the parabolic momentum came in after the ultimate breakout.