From the top of 382.55 the stock has corrected by a massive 74.5%till the levels of 97.40 and that bottom was formed
in August 2013.
What we are witnessing is some reasonable signs of bottoming out process going on with the scrip bouncing back from the lows of August 2013 and moving up by the same percentage points by which it had corrected that is 74.5%.
So in December 2013 we saw the stock of PFC hitting the high of 169.90 and that was exactly the same percentage with which it retraced from the top of 382.55. if we add 74.5% to 97.40 it comes as 169.95 and the top in December 2013 was 169.90 and we are not at all surprised by that as this is a usual phenomena and one of the basic parameters of technical’s which should be fulfilled.
So here we get the first signal of start of bottom formation process. Time taken here to reach the bottom is 33 months which as per time cycle theory is almost to the point with just one month period here n there. So this is second confirmation of bottom formation process.
From the bottom of INR 97.40 in August 2013 PFC moved up very sharply and swiftly by 74.5% to the levels of 169.90 in December 2013 and the time taken was Five months. No surprise again as time taken was stunningly perfect Five months. This is third confirmation of bottoming out process.
Now the next most important step to watch to confirm the ending of the bottoming out process and start of consolidation phase is that from the Top of 169.90 the stock if reacts and retraces, then it should form a higher bottom than the previous one, that is, the new bottom should be higher than 97.40 formed in August 2013.
And what we witnessed in January 2014 was a bottom of 129 after the top of 169.90. So this is a substantially higher bottom then the previous one.
But what sends wrong signal is that percentage retracement may be near the required parameters but time cycle correction is still far from complete. So based on this theorem we believe that one more attempt towards the bottom is still in the waiting and that could materialize within next few weeks.
And that bottom in normal scenario could be near to the INR 129 levels and in worst case scenario that could be somewhere near INR 105 – 106.
But before that we have some very important technical parameters like 200 DSMA, 13 DEMA and 55 DEMA all of which falls in the range of 144 to 147 as on the current date. So here in this range of 140 to 148 this stock has now got very good support as well as resistance. It is so because 13 DEMA is going below the 200 DSMA and 55 DEMA which is a temporary setback.
And a correction of 20% from 169.90 comes at 135.90. And 50% retracement of the total up move from 97.50 to 169.90 comes at 133.80.
So all this calculations tells us that hence forth every correction will be met with fierce and strong support. So a range within the above mentioned levels in next few weeks will surely confirm that the stock of PFC after bottoming out has surely entered in to firm consolidation mode.
For any breakout from this consolidation mode it has to cross the high of 169.90 with very good set of volumes and has to stay above the levels of 170 for four consecutive days with daily closing above that and at least two consecutive close on weekly basis above the levels of 170 and a monthly close above the same.
At present no major pattern formations are visible on short or long term charts, so this stock remains in consolidation phase. Any downfall or panic should be seen as an opportunity to accumulate the stock for some good short term trades and very good long term returns.
Astro - Tech Analyst