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Friday, October 29, 2010

Hero Honda Moving Averages Coming Together



Wow! And I thought yesterday that the Hero Honda stock price in NSE would close positively today.  I wonder which indicator I missed.

The price fell today owing to weak quarter performance of Hero Honda.

There is a bearish counterattack pattern appearing today and the market has returned to its last day's open, and this is a negative signal.

Interestingly, the 20, 50 and 100 day moving averages have come together today, which means the market is building a consensus on the next price movement.  The 20 day moving average climbs through the 50 day moving average from below, which is a positive signal.

The volume is lower than yesterday, showing that today's price fall does not have the same intensity as yesterday's rise.  This is a positive signal.

We are getting a mix of positive and negative signals, making it difficult to determine the next price movement.

Ideally, if the stock price falls further, it should find support at the 250 day moving average, as the price has not fallen below this level or remained fallen below this level for more than a week since the past 2 years.

I feel the price will fall on Monday market open, bottom out near the 20 day moving average, and rise again. For now, a short position can be entered into with a purchase at 1860, stop at 1930 levels and a target at 1820-1800.


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