BPCL : Filling Fuel for recovery

BPCL | Based on Demand Zone and Elliott Wave Analysis

[1] Chart Overview

The chart highlights a completed Elliott Wave 5-structure, with price entering a Valid Demand Zone between ₹270-280.
A potential reversal setup is visible, targeting higher levels if price action confirms buyer strength.
[2] Analysis Breakdown

1. Key Zones to Watch:
   
   Demand Zone (₹270-280):
   A deep retracement zone with strong historical buying activity.
   Liquidity likely emerges here after breaking the Major Base Support, trapping weak sellers.
   First Target Zone (₹343-355):
   Initial resistance where sellers may reappear after a reversal.
   Second Target Zone (₹387-400):
   Extended retracement supply zone where profit-taking is expected.
   
2. Elliott Wave Structure:
   
   The current chart shows a 5-wave bearish structure:
   Wave (1): Initial impulsive move down.
   Wave (2): Weak corrective pullback upward.
   Wave (3): Strongest wave breaking major supports.
   Wave (4): Minor correction upward.
   Wave (5): Final wave driving price into the demand zone.
   Wave 5 completion often signals a potential trend reversal, aligning with this setup.
   
3. Confirmation Signals:
   
   Price Action: Look for bullish reversal candlestick patterns (e.g., hammer, bullish engulfing) near ₹270-280.
   Volume Spike: Increased buying volume in the demand zone indicates institutional interest.
   Change of Character (ChoCH): Shift from lower lows/lower highs to higher highs/higher lows.
   

[3] Trading Plan

1. Bullish Reversal Trade:
   
   Entry: Near ₹270-280 upon confirmation of bullish price action or volume signals.
   Targets:
   Target 1: ₹343-355 (initial resistance).
   Target 2: ₹387-400 (supply zone).
   Stop Loss: Below ₹265 (invalidation of demand zone).
   
2. Bearish Breakdown Trade (If Setup Fails):
   
   Logic: A daily close below ₹265 invalidates the demand zone.
   Entry: Short position below ₹265 after a confirmed breakdown.
   Target: ₹240-250 (next strong support zone).
   Stop Loss: Above ₹270-275 (to avoid false breakdowns).
   

[4] Risk Management

1. []Position Sizing: Limit risk to 1-2% of total capital.
   []Stop Loss Discipline: Strictly follow stop-loss levels to prevent emotional trading.
   
2. Risk-to-Reward Ratio: Aim for at least 1:2 or higher R:R ratio (risk ₹10 to target ₹20+).
   

[5] Educational Notes

Demand Zone Reversals: Demand zones often lead to significant reversals when combined with liquidity traps and bullish signals.
Wave 5 Completions: Wave 5 typically completes a trend, offering reversal opportunities.
Patience is Key: Wait for confirmation signals to improve trade probability.
Conclusion:

Bullish Plan: Watch for reversals in the ₹270-280 demand zone, targeting ₹343-355 and ₹387-400.
Bearish Plan: Short below ₹265 if the demand zone fails, targeting ₹240-250.
Stick to the plan, follow risk management rules, and allow the market to confirm your bias before executing trades.


Disclaimer:
I am not a SEBI-registered analyst. The above analysis is for educational purposes only. Please conduct your own research or consult with a financial advisor before making trading decisions.