Reliance Analysis dated 6th Jul 2010

RIL completed it wave 1 down move [depicted in yellow font orange box] on an open low of Rs. 976 on 30th June. From that point Reliance has moved up in a flat formation 3-3-5 depicted in blue font a-b-c, ending at 30 Jun high of Rs. 1093. The rise of wave c od wave wave 2 has been a rather a Rising Diagonal type structure, a  break of line connect TL 1 shall be majorly bearish for reliance. The monthly pivot for reliance is at 1056, a rather strong support. The 34 EMA is at Rs. 1054. The bottom supports are in place. I expect a break of TL 1, which shall trigger a wave 3 for reliance, with a target of approximately Rs. 825.

Further the ATR is a lowest from Jan 2010, which also signals an change in trend is possible. Generally a lower ATR is accompanied by a change in trend, as it marks an exhaustion of currrent trend. The current ATR(14) is 23.

EOD Chart of Reliance:

Trade Strategy for RIL: A break of 1059 on EOD could be used to Short with a Stop loss of 1105 (earlier was wrong). This shall be an EOD based strategy. Upside potential is limited for Reliance, however, a break above today's high of 1081 shall be bullish, but i expect a target of only 1100 odd on RIL which shall be converging point for trendline joining (i) and (iii). Also, wave (iv) of wave 1 down is at 1100 which is rather huge resistance for upside move.

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