ITC: Channelling technique at its best, Will it work again?

ITC is one of India’s foremost multi-business enterprises. This stock has heavy weightage on the index. When other FMCG majors have strongly outperformed, ITC has been lagging little behind so far. Also, the rise from the lows of 135 has been accompanied with rising volumes. This is a very promising sign and one can expect the short term trend of the stock to be positive as long as — is protected on downside.

Following was published in the monthly research report on December 2020

ITC weekly chart:

ITC daily chart (Below extract is taken from Monthly research published on December 2020)

Wave perspective – As shown on the weekly chart, prices are in major degree wave (3) of the impulsive rise. This wave (3) is still on-going and currently the stock completed intermediate degree wave (iii) of (3) at 370 levels. Post that, prices are witnessing correction since 2017 in the form of wave (iv).

Long term moving average – The 250 day Moving average is acting very well on the stock. Prices have breached this support in 2019 September and since then, the secondary trend has turned bearish.

Daily chart- We have shown the internals of wave (iv) in the daily chart. Prices are probably
forming a neutral triangle correction if not a diametric. Break above multiple resistances at 210 levels indicates that probably wave (c) is over and currently prices are in wave (d).

Channelling technique- Prices are approaching the upper line of the red channel drawn. Also, the shorter duration channel (blue) is sloping upwards indicating that that the short term trend continues to be up. Price can be seen taking resistance near the upper blue channel line. Only a break below the lower line of the blue channel followed by break of pivot low of 160 levels would indicate that wave d is over and that will be the first sign of short term trend reversal. Until then, the trend remains positive.

Pattern analysis – As can be seen on the daily chart, Prices have formed a double bottom formation and a break above 210 level completed the pattern. Also, the rise from the lows of 135 has been accompanied with rising volumes. This is a very promising sign and one can expect the short term trend of the stock to be positive as long as — is protected on downside.

In a nutshell, the short term trend of ITC is positive. Prices are expected to move towards the levels of — as long as — is protected on downside. However from long term perspective, the stock is still in a corrective phase and long term investors can wait for the dip towards the lower blue channel line for an ideal entry.

Please Note- Levels are hidden purposely. Kindly use this article for educational purpose only.

To Get access to intraday/positional calls and Research Report click here.

Mentorship on Trading using Technical Analysis March 2021 – Early Bird ends Today – Get access to this 3 months of exhaustive training and learn the science of Trading along with Risk and Money management strategies, Simple algo creation for stock selection, Elliott wave and much more. No prior knowledge, No Software required. We will ensure you get the tools necessary to become one of the finest traders – know more here