Science of Stock Price Action:
When a stock makes a new high, and then sustains above it – then that’s considered stock has a new base on the roof and it’s a matter of time before stock makes another huge upmove from the roof.
This is different from Breakout.
In Breakout – stock breaks a barrier (well-defined resistance) and then runs like crazy. But ON THE ROOF pattern is different. Here stock quietly climbs to a new high (i.e. above the previous high) and then quietly sits on that high for quite some time before making a big move. What should one watch out for –
1. A stock making a new high
2. Stock quietly consolidating with treating previous high as the base for some time.
Example: The stock that has formed this pattern – Jubilant Foodworks. This is Jubilant Foods weekly chart
Source: Chartalert.com
Even on the daily chart – the consolidation looks attractive as the stock seems well set to fly from 50 dma
Source: Chartalert.com
The stock looks attractive at the current market price of 1597 with a stop loss of 5% below it.
Disclaimer – The state of the market notes is Deepak’s perspective on the market. The column is purely for educational purpose. Nothing contained herein is a solicitation to trade or a recommendation of a specific trade. By reading this publication you agree to make no trade relying in whole or in part on the comments of the writers
Jubilant Foods today
The new stock to watch – Tata Global
tata global up 10% in 2 days.
Jubilant Foods continue to move higher – now up 19%