Potential Double In Reliance Communications

Below is a daily chart of Reliance Communications, which recently met our downside price target near 4.01 and has sharply reversed. This reversal back above former support of 4.85, prices have confirmed a failed breakdown and bullish momentum divergence.

Click on chart to enlarge view.

We're not typically bottom-fishers, but occasionally a ridiculous reward/risk scenario justifies taking a lower probability counter-trend trade. Given that Reliance Communications is 60% below its 200-day moving average, this is a trade we're willing to take a shot on.

As long as prices are above 4.85, we want to be long with an initial upside objective near 9.60 and a secondary target of 12.00.

Given this is a lower probability counter-trend trade the likelihood of a whipsaw is high, so make sure to adjust your position size and risk management approach accordingly.

Trades like this typically play out very quickly, so we'll likely know whether this is going to work or not within the next week or two.

Thanks for reading and let us know if you have any questions!

If you enjoyed this post and want access to all of our premium content, start a 30-day risk-free trial or sign up for our "Free Chart of the Week" to receive more free research like this.

Allstarcharts Team