NFL … National fertilisers Ltd chart presents interesting possibilities. The stocks from the sector have had a very good run up in recent months and a lot of them seem to be showing resilience in a topsy turvy market.
NFL chart had a strong run up when it went up from 15 to 74 , nearly 5 times in 14 months beginning March 2020. Since May 21 when it posted swing high of 74, stock went into a corrective mode as marked on the chart by a flag like consolidation. (this is not a typical flag like consolidation but more of a flag shaped correction.) After bottoming out at 41, just above 61.8% retracement level and close to 50% retracement level at 45, (again strong support shown by two previous swing tops which now offered support) stock price rallied and broke above the falling weekly trendline in April and has managed to stay above the trendline in a tight range between 58-65 for four weeks. Many a times, these tight consolidations post any kind of breakout, without suggestion of major weakness is healthy for next move up. This is a sort of platform where one takes a rest after climbing a big number of steps and once we regain strength and breath, we are ready to climb next set of stairs at a fast clip.
On the weekly chart, close to 15-17 stock price has made two important bottoms in 2013 and 2020. The intervening peak was at 89.5. (90 for a rounded figure)… Now after breakout from falling trendline if stock prcie manages to take out its swing high of 74 and cross 90, it will have completed a double bottom long term W type of breakout and post that target can be 155.
The trade set up equation at current juncture I have made for myself is buy at around current level of 60, with a stop loss of 54 (200 dema which is climbing up day by day) and aim for targets of 90 and 155 over medium to long term. The only drawback with these kind of trade set ups is we are not too sure how long these sideways consolidations are going to last. (range of 57-65) …