Science of Stock Price Action: When a stock has an upside resistance, then it tends to underperform and one is better off staying away. The Opportunity develops when they breakout above the resistance
TCS – Struggling below the Line of Resistance
Source: Chartalert.com
As you can see in the chart above – TCS stock has a pretty well-defined line of resistance @ 2270 and as long as the stock trades below it, there is no positional trade one can take for now. On the downside, there exists one support around 240-week moving average and we will once again discuss when the time comes
Dr Reddy – Line of Resistance
Source: Chartalert.com
The market does not like Frontline Pharma stocks. Having said that, Dr Reddy stock has done quite well in 2019 after forming double bottom earlier this year. Now it needs to take out the resistance of 2950-3000 before everyone gets excited
Titan below Line of Resistance
Source: Chartalert.com
Titan stock too has sold off from 1340 and that looks the upside cap for the stock for now.
What does this all mean?
When a stock trades below a well defined Line of Resistance, then the upside remains capped. One should wait for a clear breakout in the stock before jumping in