Education

Rarest of Rare Double Rounding Bottom with Break n Retest Pattrn

Updated

INVESTMENT IDEA // MULTI-BAGGER

DISCLOSURE & DISCLAIMER

➢ AT CURRENT PRICE LEVELS THIS IDEA IS FOR EDUCATIONAL PURPOSE ONLY. DEPENDING ON THE FURTHER PRICE MOVEMENT IN COMING WEEKS OR MONTHS, I MIGHT POST A BUY RECOMMENDATION, ONCE IT FULLY MEETS MY CRITERIA. YOU CAN FOLLOW ME FOR ANY SUCH POST IN FUTURE.

➢ ALL MY IDEAS AND RECOMMENDATIONS ARE SUBJECT TO MARKET CONDITIONS. PLEASE TRADE / INVEST / FOLLOW / COPY THE IDEA AT YOUR OWN RISK. I DO NOT TAKE RESPONSIBILITY OF YOUR LOSS OR CREDIT FOR YOUR PROFIT.

➢ I MAY OR MAY NOT HAVE ANY PERSONAL INVESTMENTS IN THIS SCRIPT.

➢ AS THE IDEA IS FOR LONG TERM INVESTMENT AND NOT FOR TRADING. THE IDEA BASED ON BOTH STRONG TECHNICAL & FUNDAMENTAL (QUANTITATIVE) ANALYSIS OF THE STOCK.

➢ ROUNDING BOTTOM STOCKS TEND TO GIVE FALSE BREAKOUTS AT DIFFERENT LEVEL AS THEY TRY TO CROSS MULTIPLE RESISTANCES AT MULTIPLE INSTANCES. THOUGH THE RISK REWARD IS VERY HIGH FOR THESE PATTERNS, IT’S VERY IMPORTANT TO FOLLOW STRICT PRICE LEVELS FOR ENTRY AND EXITS.

So let’s begin....

What is a rounding bottom pattern and how it works?

In general, as the name suggests, when the stock chart has a curve or rounding shape as marked in the above chart it can be called Rounding Bottom Pattern. This pattern can occur anywhere in a chart and on any type of chart (Intraday, Daily, Weekly, Monthly etc). Though its not simple to use with a thumb rule per say, but an experienced technical trader can easily identify and use it effectively for his trading after several confirmations and combinations, such as price volume breakouts, DEMA crossovers or several other technical indicators.

How to identify a multi-bagger with rounding bottom pattern?

Just for the beginners, Multi-baggers are generally referred to investment grade stocks that gives returns that are multiple times of the buying price. So if you invest in a stock Rs. 100,000 in XYZ stock and over the period of 2-3 years it is worth of 500,000; The XYZ stock can be called as 5X bagger.

So now let’s see what is a Double Rounding Bottom Multi Bagger (DRBMB) with a retest. An DRBMB stock must meet certain criteria, which I am listing as below:

(Please select and refer the monthly chart of the stock with full history available)

- The stock should have a history of at least 10 years.
- In the past, stock price must have performed at least 5 times of the current price levels and fallen
from that peak gradually over months / years.
- Stock must have made 2 rounding bottom patterns in the time frame of 2-3 years each.
- Consolidation breakout as shown in the chart herewith.
- Confirmation on fundamentals (as below)

Do I need to check Fundamentals of company?

- Further to above confirmations, above chart pattern must be backed by the quantitative and qualitative fundamentals of the company. For example, once the consolidation breakout happens the company should start posting positive quarterly earnings every quarter consistently for 2-3 years minimum.

- Company should continuously doing reforms such as debt reductions, bagging new orders, promoters releasing their pledging and buying back more stake in the company etc.

(If you are not confident of doing the above yourself, for both the above confirmations, you can watch news channels (which I don’t recommend otherwise) and follow the renowned fundamental analysts who will definitely post their views on the stock time to time as it progresses.)

Why GMR INFRA?

In my view, GMR INFRA is a potential DRBMB which can qualify all the above criteria and can become a wealth creator over the period of 3-5 years.

When should I start and stop tracking?

Easiest way is to follow me, as I will be posting updates on this post so you can be well aware about the entry point and exit points. Other option is to follow the below quick price level summary by putting level alerts:

LTI Educational Call // Dated: 21 / 09 / 2020

NSE: GMRINFRA

LTP: 23.95

ENTRY: When Monthly closing is above 30.00

EXIT (STOP LOSS): When Monthly closing is below 25.00 (20%)
(If you need accurate SL / Exit when MONTHLY 5 EMA crosses below MONTHLY 26 EMA)

TARGET 1: 80.00 (3x times of Entry Price within in 1 Year)

TARGET 2: 120.00 (3x times of Entry Price within 2 Years)

TARGET 3: Follow me... :-)

Are there any references or examples of such patterns?

Check out the stock TANLA SOLUTIONS (NSE: TANLA) for the similar chart pattern.

Would there be any opportunities of short term / swing trading in this stock?

Yes, once the stock is closed above 200 Monthly EMA there will be ample opportunities of swing trading and short term trading as well.

HAPPY INVESTMENTS & TRADING!!

Note

GMR Infrastructure's SEZ unit to sell 51% stake in Kakinada SEZ to Aurobindo Realty.. Stock 8% Up today..

Note

Pledging released by the promoters....Good news for the stock...

Note

7% UP today Trading @ 26.8

Note

Trading at 28 Now....Going as per the expectations...almost 16% UP from the posting

Trade active

Watch for 28-29 zone and once it survives this zone for 2-3 sesions. Entry recommended for long term.

Amit_Padishalwar

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