In the last couple of weeks RAMCO cements has dropped sharply and come down to former swing low levels where demand, ideally, should emerge. As if on cue, the news relating to possible price hike by cement producers has emerged. This has enabled the prices to find demand at the last swing lows around the current levels and produce an upward spike.
Though Ramco Cements has delivered revenue (net of excise duties and taxes) rising by 15% to 1,217 crore (1,062 crore) on higher cement sales in the domestic market at 26.89 lakh tonnes (22.43 lakh tonnes), its operating profit fell to 221 crore (240 crore).
A look at the chart shows the effectiveness of Support and Resistance levels. Several horizontal lines have been drawn to the chart, highlighting past price pivots. When those same levels are reached again in the future, they continue to act as either support or resistances. For eg. Note that the supports near 725 levels back in Feb 18 acted as a good resistance when approached again during Aug-Sep 2018. The resistance at 660 in Oct 18 is continuing to offer resistance in Jan 19 and containing advances. The level of 626 was a support in Jul 18 and Oct 18 but flips around to resistance in Nov 18 and again in Jan 19.
On rise from current levels, we may therefore expect 625 level to continue to offer resistance and crossing that would put us into the next resistance zone at 660. And so on.
This chart is a good example of how stock prices are forever moving from one support level into a resistance and back. The two have a role-reversal nature and keep flipping back and forth in the performance of these roles.
This method works on any time frame chart because the concept of Supports and Resistances are universal and not restricted to any specific time frame chart. Therefore it is a good technique to use whether one is trading or investing.