ONGC stock is in downtrend for the last two years in line with the fall of crude oil prices when the oil started to plummet from 100+ levels to 25 odd levels.
In the due course, the stock fundamentals have changed from good to average and the stock price has come down by 50%.
What can happen next?
The stock can raise from the current levels to all time high of 468 levels in two years of time.
Though the stock has fallen down by 50%
- The fall was contained by the good support at the trend line – which confirms the trend is still intact
- The gradual manner in which the stock has fallen and formation of base around 200 levels gives an indication that stock is forming a cup pattern – which takes the stock to the new highs in the coming years
How to trade this stock?
- Aggressive traders can jump into the trade straightaway with the target of 462 and stop loss at 130
- Moderate traders can wait for the stock to get out of the base;watch for any spike in the price accompanied with heavy volumes in coming days – enter the trade with a target of 468 and stop loss of 130
- Note that the holding period is 2 years but the stock does provide multiple opportunities around 200 levels for aggressive traders with short term profit of say 5–10% in a week or two – make sure a strict stop loss is maintained at 185 levels in such a case