Biocon - A case study for Long Term Investment

2021年8月23日

This is the monthly chart. Recently Biocon broke the support levels of 360-365 and this resulted in a major 10% fall upto 330 levels.

For long term investors, the question that arises here is - Where is the next buying zone? From which price levels the stock will show a bounce back?

Here we will learn the use of EMA or Exponential Moving Average. Every stock respects a different exponential moving average and hence a single EMA cannot be used as a common standard. From the historical monthly chart, we can observe that the stock has been respecting the 50 day EMA (more than 3 times) in the Monthly Timeframe for the past 8 years. Now the stock is coming down to the 50EMA support having broken the 20EMA support zone.

Thus we can initiate a buy around 300 levels, where the 50 day EMA support exists.

When to buy?
We should buy only when we receive multiple confirmations. Those should be:
a. Stock respects the 50 EMA support.
b. Stock forms a bullish hammer or bullish harami candle from the 50 EMA support.

Only when these two conditions are satisfied, we can initiate a BUY on this stock.