Punj Lloyd for Quick Gain?

While scanning through few midcap charts, Punj Lloyd grabbed my attention because of clear inverse head and shoulder formation on daily chart. It offers good trading opportunity with stop loss at 24.5 with target around 34. I looked at few other competitors’ charts for some more cues. And competitors like Sadbhav Engineering and BGR Energy are bottoming as well.

Punj Lloyd showing signs of reversal

Let’s take a look at the big picture to see if we can spot anything interesting there. The chart below shows monthly time frame for Punj. It has been in downward wedge from the highs of 2007. And in August, it actually broke the wedge downwards. But judging by the price action for September and October, it is again inside the wedge indicating possible false breakdown signal. Now, it may try to do exact reverse in the coming days by moving towards the upper end of the wedge!

Falling Wedge of Punj

While we want to believe only what we see on the chart, always keep in mind that days from October 13 to October 30 are notorious for sharp movements for entire market.