BRIGADE : Is it ready to build a new tower?** Chart Analysis: What’s Happening?
The chart shows a classic Elliott Wave setup with a potential swing trading opportunity. Here’s the breakdown:
Elliott Wave Structure :
The price appears to have completed a corrective wave (labeled as A-B-C) around the Correction Wave Completion Zone of 937-972. This zone acted as a strong support area, where the price found a base after a sharp decline.
Point b (A) marks the end of the corrective wave, followed by a liquidity buildup at the support zone . This often signals a reversal as buyers step in, absorbing selling pressure.
Key Levels :
Support Zone (937-972) : This is where the price reversed, indicating strong buying interest. The note on the chart mentions that a "break up or break down can lead to price movement," which aligns with the breakout we’re seeing.
First Swing Target (1,049) : The price has already broken above the support zone and is heading toward this target.
Second Swing Target (1,258-1,296) : This is the next major resistance zone, where the price could face selling pressure if the bullish momentum continues.
Stop Loss (Day Close Below 900) : A critical level to protect against a failed setup. A daily close below 900 would invalidate the bullish thesis.
Current Price Action :
The price is currently at 939.35 (as of March 19, 2023), showing a slight decline of -0.75 (-0.08%). However, it’s still above the support zone, indicating that the bullish setup remains intact.
The chart shows a breakout above the corrective wave structure, with the price testing higher levels after the reversal at point (A).
** Plan of Action: How to Trade This Setup
Based on the chart, here’s a step-by-step plan for swing trading BRIGADE :
Entry Point :
The price has already broken above the correction wave completion zone (937-972). A good entry would be on a pullback to this zone (around 950-970) with confirmation of support (e.g., a bullish candlestick pattern like a hammer or engulfing candle). Alternatively, aggressive traders can enter on a breakout retest above 950 with strong volume.
Target 1 (1,049) :
This is the first swing target. If the price reaches this level, consider booking partial profits (e.g., 50% of your position) to lock in gains, as this level may act as resistance.
Target 2 (1,258-1,296) :
If the momentum continues, aim for the second swing target. This is a significant resistance zone, so expect potential profit-taking or a reversal here. Be ready to exit the remaining position if signs of weakness appear (e.g., bearish divergence on RSI or a shooting star candlestick).
Stop Loss :
Set a stop loss on a daily close below 900 , as indicated on the chart. This ensures you’re protected if the price breaks down and the setup fails.
** Risk Management Tips for Options Trading
Since this is a swing trading setup, options can be a great way to leverage the move while managing risk. Here are some tips:
Choose the Right Strike :
If you’re buying a call option, select a strike price near the current price (e.g., 950 or 1000 strike) to balance cost and potential returns. Avoid deep out-of-the-money (OTM) options, as they have a lower probability of success.
Position Sizing :
Never risk more than 1-2% of your trading capital on a single trade. For example, if your account size is ₹5,00,000, your maximum risk should be ₹5,000-10,000. Calculate your position size based on the difference between your entry and stop loss.
Time Decay (Theta) :
Options lose value as expiration approaches. Choose an expiration date that gives the trade enough time to play out—preferably 30-45 days out for a swing trade like this.
Use Stop Losses :
Even with options, set a mental stop loss based on the underlying stock price (e.g., a daily close below 900). If the trade goes against you, exit the option position to avoid further losses.
Avoid Over-Leveraging :
Options can be tempting due to their leverage, but don’t overexpose yourself. Stick to a small position size to manage risk effectively.
** Summary and Conclusion
To recap, BRIGADE is showing a promising swing trading setup after completing a corrective wave and breaking out above the 937-972 support zone. The price is targeting 1,049 in the short term, with a potential move to 1,258-1,296 if the bullish momentum continues. A stop loss on a daily close below 900 ensures risk is managed. For options traders, focus on proper strike selection, position sizing, and time decay to maximize returns while minimizing risk.
This setup offers a good risk-reward ratio, but always trade with discipline and a clear plan. Happy trading, and may the markets be in your favor!
** Disclaimer
I am not a SEBI-registered analyst, and this analysis is for educational purposes only. Trading and investing involve risks, and you should consult a financial advisor before making any decisions. Always do your own research and trade at your own risk.
