Historically Big leverage deals have usually happened around peak of sector. More importantly the acquiring co have gone down big way. Will history repeat again and cement sector will have tough times ahead or times have changed.!!? Let's c whts ahead. #adaniholcim deal.

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#RSI is a common indicator which most of us use in the stock market.

This learning thread would be on
"๐™๐™จ๐™š๐™จ ๐™ค๐™› ๐™๐™Ž๐™„"

Like๐Ÿ‘ & Retweet๐Ÿ”„ for wider reach and for more such learning thread in the future.

Also, an investment strategy is shared using RSI in the end.

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Setup 1:

RSI- commonly used to show whether price is overbought or oversold.

General rule:
๐‘๐’๐ˆ > ๐Ÿ•๐ŸŽ -- ๐Ž๐ฏ๐ž๐ซ๐›๐จ๐ฎ๐ ๐ก๐ญ
๐‘๐’๐ˆ < ๐Ÿ‘๐ŸŽ -- ๐Ž๐ฏ๐ž๐ซ๐ฌ๐จ๐ฅ๐

One becomes cautious once price becomes overbought and optimistic when price becomes oversold.

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Let's understand this with an example of Laurus Labs:

1. It was in overbought zone and after a few days when a small dip was seen from 693 to 588 (15% downside)

2. It was in oversold zone and after a few days when a small rally was seen from 59 to 107 (82% upside)

3/16


Well, this looks very easy, but it is not.

When a price is in overbought zone and is in momentum, then it can move up without taking a dip and exiting or shorting stock would prove wrong.

When IRCTC was in overbought zone, price went up from 2718 to 6396 (135% rally).

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Similarly, for oversold stock.

When a price is in oversold zone and is crashing, then it can move down without taking an upmove and buying stock would prove wrong.

When DHFL was in oversold zone, price went down from 126 to 11 (91% crash).

5/16

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A THREAD ON @SarangSood

Decoded his way of analysis/logics for everyone to easily understand.

Have covered:
1. Analysis of volatility, how to foresee/signs.
2. Workbook
3. When to sell options
4. Diff category of days
5. How movement of option prices tell us what will happen

1. Keeps following volatility super closely.

Makes 7-8 different strategies to give him a sense of what's going on.

Whichever gives highest profit he trades in.


2. Theta falls when market moves.
Falls where market is headed towards not on our original position.


3. If you're an options seller then sell only when volatility is dropping, there is a high probability of you making the right trade and getting profit as a result

He believes in a market operator, if market mover sells volatility Sarang Sir joins him.


4. Theta decay vs Fall in vega

Sell when Vega is falling rather than for theta decay. You won't be trapped and higher probability of making profit.