Published on: March 20, 2024
Stock market – the game of the leader and emerging leaders as titans, commanding attention and admiration from investors and analysts. One such stock is ITC.
ITC is a prominent player in the FMCG sector and a cornerstone of the Nifty50 index, stands as a prime example. However, ITC’s stock price journey has been a rollercoaster ride, marked by intriguing phenomena such as the ‘meme king’ phase of 2021 and the disbelief rally of 2022 and 2023. Amidst these fluctuations, a peculiar occurrence has recently caught the eye of market observers – forming a significant gap in the price chart.
The Meme King Phenomenon and Disbelief Rally:
In 2021, ITC gained notoriety as the ‘meme king’, capturing the imagination of retail investors and social media enthusiasts. This surge in popularity propelled the stock price from Rs. 210 to Rs. 499 as speculative fervour gripped the market.
Subsequently, 2022 and 2023 witnessed what is colloquially called the ‘disbelief rally’. Despite scepticism surrounding the sustainability of ITC’s upward momentum during this period, the stock continued its ascent. Investors grappled with a curious mixture of doubt and fascination as ITC defied conventional wisdom.
The Emergence of the Gap:
With the flurry of activity surrounding ITC’s price action and the formation of a significant gap on the price chart, we are excited to share it with our readers. Gaps, characterised by a sudden jump or drop in price, often hold significance for technical analysts. The recent dip from Rs. 400 witnessed a reversal marked by a gap-down low followed by a bullish gap. This sequence of events signalled a potential reversal in the stock’s trajectory.
ITC Daily Chart
Source: Trade Point
At the psychological level of Rs. 400, the emergence of the bullish gap presents a compelling opportunity for bullish traders. The gap acts as a pivot point, signifying a shift in market sentiment from bearish to bullish.
Volume Analysis and Bullish Momentum:
A closer examination of volume dynamics further reinforces the bullish thesis. The recent dip to fill the gap occurred with lower volumes, indicating that bulls are still firmly in control of the narrative. In technical analysis, volume is a confirmation tool, validating the strength of price movements. The subdued volume during the retracement suggests that underlying bullish momentum remains intact.
Oscillator Insights and Reversal Strength:
Turning our attention to oscillators, the Relative Strength Index (RSI) offers valuable insights into the strength of ITC’s reversal. The slope of the RSI is trending upwards, accompanied by a pattern of higher highs and higher lows. This structural formation reaffirms the notion of bullish momentum gaining traction, bolstering confidence among traders and investors.
The emergence of a significant gap has captured the attention of bullish traders as the gap represents an enticing opportunity, with psychological significance and supportive volume dynamics underpinning the narrative as oscillators signal strength in the reversal and anticipation mounts for further upside potential in ITC’s stock price
