This is going to be a quick post looking at the potential failed breakdown that can lead to Reliance Communications doubling in a few months.
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.
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!