Long Term -Compounder Journey
How an EW practiotioner rides a long term compounder.
Let’s learn by examples .
KRBL
The following is a monthly chart.
Readings of monthly charts play out in months and years so this is not for short-term investors
As per this ,KRBL is in wave V (maked in sky-blue) of bigger wave 3 (marked in purple) .
This shows a lot of potential and can go near to 2000 and then it might correct in a big way in wave 4.
Keep in mind that it does happen in days and weeks -it takes years. Check how much time Wave III took? From 2011 to 2017 -6 years 9from 13 to 628) !So this is not for traders.
An EW practioner tries to find these stocks at an early stage and then trails it by long term moving averages. For example, in this long term investment- one would follow 40 Months moving average (green line).
Multibaggers journeys are never in straight line.
In wave III, the stock went to 628 and then stated correcting in IV. It broke and closed below the 40 MMA in June 18 , the price was at 350. So either a long term investor can exit fully ( it went down to 95 after that ) or he can exit partially as it has a still long way to go and he has lot of margin of safety if he entered at the start of wave III (somwhere near 14 -30 levels).
In coming months - we are at a key resistance level as of now - lower horizonatal red line.( range of 390-410) . If it starts and closing above that range on monthly levels - then after a retest , we might assum that upward journey has begun- next level of resistance is near 590-600.
Wave V wont be stright line - as every wave has 5 waves within- so up and down price movement would continue.
Once we take broader view,we track our entry points on daily/weekly levels as wave structure . At the same time, we keep a watch on fundamentals of the company - they need to show consistent ,above-average performance if stock has to move successully.
Disclaimer :These are just probabilty studies. Price movement of a stock depends upon several factors- fundamentals of the company, market/sector conditions etc etc. Please dont take it as a buy or sell recommentaion.
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