Investment Series #1: Healthy Rally in PVR INOX?
We discussed the difficulties in identifying the low of wave 2 in my previous analysis of Bandhan Bank. However, if we are able to pinpoint that turning point, it presents a favorable risk-to-reward ratio.
PVR Inox has been in a consolidation phase or moving sideways for the past four years. Following the low of the COVID crash, it tested the previous swing high. According to Elliot waves, this could potentially mark the end of wave 1, which expanded in the form of a leading diagonal (common in wave 1). Subsequently, wave 2 followed. Typically, wave 2 represents a significant correction. It appears that it corrected to around 61.8%, which is where we can anticipate wave 2 concluding. Additionally, it exhibited a Zig zag correction, which is common characteristic of wave 2.
If our analysis proves accurate, we can anticipate the price rallying to levels around 2200 as part of the minor 3rd wave.
How should we approach trading this? We can consider entering with 20% of our positions at this level as an initial test. Then Let's wait for stock to close around 1430 - 1440 by the June month end. If it does, we can plan to add another 30%. If the stock continues to move in our favor and demonstrates the characteristics of wave 3, we can plan to add another 50% when the stock pulls back to the 23-38% retracement levels. I will keep you informed of any future developments
Entry, stop loss, target & wave counts are indicated on the chart
Disclaimer: Please note that the information presented in this analysis is intended for educational purposes only. It is highly recommended to seek advice from a financial advisor before making any investment decisions. I cannot be held accountable for any financial losses that may arise
PVR Inox has been in a consolidation phase or moving sideways for the past four years. Following the low of the COVID crash, it tested the previous swing high. According to Elliot waves, this could potentially mark the end of wave 1, which expanded in the form of a leading diagonal (common in wave 1). Subsequently, wave 2 followed. Typically, wave 2 represents a significant correction. It appears that it corrected to around 61.8%, which is where we can anticipate wave 2 concluding. Additionally, it exhibited a Zig zag correction, which is common characteristic of wave 2.
If our analysis proves accurate, we can anticipate the price rallying to levels around 2200 as part of the minor 3rd wave.
How should we approach trading this? We can consider entering with 20% of our positions at this level as an initial test. Then Let's wait for stock to close around 1430 - 1440 by the June month end. If it does, we can plan to add another 30%. If the stock continues to move in our favor and demonstrates the characteristics of wave 3, we can plan to add another 50% when the stock pulls back to the 23-38% retracement levels. I will keep you informed of any future developments
Entry, stop loss, target & wave counts are indicated on the chart
Disclaimer: Please note that the information presented in this analysis is intended for educational purposes only. It is highly recommended to seek advice from a financial advisor before making any investment decisions. I cannot be held accountable for any financial losses that may arise
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