Yesterday we discussed the major indices in India and how the weight of the evidence is beginning to suggest we’re close to a tradeable low.
In today’s post, I want to outline two “trash to treasure” trade setups that are low probability in nature but offer a ridiculously skewed reward/risk at current levels.
As long as prices are above that level, we think it makes sense to be long and see how this develops. Our first upside price objective is near 69, but with prices this far below their mean, there may be even more upside than that. We’ll reevaluate if/when we get to 69.
Click on chart to enlarge view.
Idea Cellular Ltd. has failed in its attempt to rally several times over the last 18-months, so we’ll see if this time is different. As long as prices are above 5.30 then this failed breakdown and bullish momentum divergence remain intact and support higher prices. It’s sitting roughly 300% below its 200-day moving average, leaving a lot of room for potential mean reversion. With that said, our upside target is near 11.00, at which point we’ll reevaluate.
We’re keeping this post short and sweet because the reward/risk in these two setups speaks for itself.
As with most setups of this nature, we’re likely to know very quickly if we’re right or wrong, so let’s see how they develop in the coming days.
Thanks for reading and let us know if you have any questions!