As we indicated yesterday, the stock hit exit levels on opening, today. We can see the stock closing lower than our exit price, giving a Red impulse bar, indicating turning down of EMA. When EMA turns down on Daily, the intermediate trend in bearish.
The reason for exit in this stock is the MACD line, giving bearish divergence at the highest high closing in the present up move. This is a strong bearish signal. Along with this there is a Force Index bearish divergence on weekly charts(not shown here). When both combines, it gives a perfect short signal. As we are not allowed to hold short positions in cash market, we exit this counter and look for the next best opportunity on other stocks.
We have not made big gains in this stock, but still our exit has perfection in timing. All trades do not get expected gains. Trading is not a perfectionist game, it is a probability game. We take a bet on our technical analysis, some work and some fail. If we have the probability of winning more than the losers, we will be far ahead of the crowd.
In this trade we have made a profit of Rs. 332.94 on the Rs.978.00 risk we took while opening the position, giving a 0.34% return on risk.
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