Bottom Reversal: Stock Gains 5% Amid ‘Bullish Divergence’!

  • Stock Market Analysis
  • Editors Pick
Aayush Khanna/Investing.com - Investing.com

Bullish Divergence is one of the best reversal signs and my personal favorite. It is simply the disagreement between the price and the corresponding oscillator, wherein, the price makes a lower low but the indicator fails to replicate the same.

Today, the share price of Amber Enterprises India (NS: AMBE ) initiated its reversal from the lows after forming a bullish divergence. The company manufactures home electronic items such as washing machines, refrigerators, ovens, etc., and has a market capitalization of INR 6,631 crores. The stock is currently trading at a P/E ratio of 60.74 compared to the industry’s average of 143.09.

Image Description: Daily chart of Amber Enterprises India with the RSI at the bottom

Image Source: Investing.com

After a consistent fall for a long time, the stock had been making a bullish divergence on the daily chart. Almost since the last few days of October 2022, the stock had been inching lower but the corresponding RSI (daily,14) had remained almost around the same level. While the price kept on falling to lower levels, the RSI failed to fall further which was the beginning of the divergence.

On 30 November 2022,  when the price fell to a 52-week low of INR 1,920, the RSI was trading around 30.6 which represents almost an oversold zone. Precisely, below the reading of 30, a stock is considered to be oversold, but 30.6 is not far from this level. This oversold zone worked as a catalyst for the bullish divergence to materialize what it's known for - a reversal. 

While yesterday the stock started to gain momentum closing the session, 0.87% higher, today it bolstered to a high of INR 2,092, which is the highest level in over a month. Currently, the stock is trading 4.26% up at 2,021, by 2:33 PM IST and seems like it’s all set to make a move on the upside. The volume for the day so far has been recorded at over 491.7K shares which is the highest one-day volume since 9 June 2022.

As the stock is already beaten down, a sharp reversal from here could easily come, just like what is currently happening in PayTm. A rally till INR 2,400 could easily come in the next few days which is around a 20% gain from the CMP. On the downside, if it breaks its 52-week low marked on 30 November 2022, then the downtrend could continue and a newer divergence should be searched for before attempting to capitalize on the reversal. 

Add Chart to Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Drop an image here or Supported formats: *.jpg, *.png, *.gif up to 5mb

Error: File type not supported

Drop an image here or

100
Please try another search
  • Shah Khan @Shah Khan
    thank you very much
    Like 0
  • Sunil Pawar @Sunil Pawar
    उत्कृष्ट चार्ट पढ़ना
    Like 0
  • Sunil Pawar @Sunil Pawar
    उत्कृष्ट चार्ट वाचन
    Like 0
  • Ranjan Lohmorh @Ranjan Lohmorh
    good
    Like 0
    • Aayush Khanna/Investing.com @Aayush Khanna/Investing.com
      Thanks Ranjan :)
      Like 0

      • Comment Guidelines

      We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

      • Enrich the conversation
      • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
      • Be respectful. Even negative opinions can be framed positively and diplomatically.
      •  Use standard writing style. Include punctuation and upper and lower cases.
      • NOTE: Spam and/or promotional messages and links within a comment will be removed
      • Avoid profanity, slander or personal attacks directed at an author or another user.
      • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
      • Only English comments will be allowed.

      Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

      Drop an image here or Supported formats: *.jpg, *.png, *.gif up to 5mb

      Error: File type not supported

      Drop an image here or

      100
      Please try another search
  • Ritu Rajput @Ritu Rajput
    Nifty upside h ya dwon side
    Like 1
    • Aayush Khanna/Investing.com @Aayush Khanna/Investing.com
      Aaj to down hai :)
      Like 0

      • Comment Guidelines

      We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

      • Enrich the conversation
      • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
      • Be respectful. Even negative opinions can be framed positively and diplomatically.
      •  Use standard writing style. Include punctuation and upper and lower cases.
      • NOTE: Spam and/or promotional messages and links within a comment will be removed
      • Avoid profanity, slander or personal attacks directed at an author or another user.
      • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
      • Only English comments will be allowed.

      Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

      Drop an image here or Supported formats: *.jpg, *.png, *.gif up to 5mb

      Error: File type not supported

      Drop an image here or

      100
      Please try another search
  • namami ghosh @namami ghosh
    excellent article... curious to know how you track divergence... do you use a screener or filter? or is it just by drawing trendlines?
    Like 0
    • Aayush Khanna/Investing.com @Aayush Khanna/Investing.com
      It's difficult to make a screener for divergence. I keep a tab on oversold stocks.
      Like 1
    • namami ghosh @namami ghosh
      Thanks for the input, Guruji. So i am guessing you set an alert for oversold stocks where RSI is below 30 and then draw trendlines
      Like 0
    • Aayush Khanna/Investing.com @Aayush Khanna/Investing.com
      Personally, I don't draw trendlines. Just a glance is enough :)
      Like 1

      • Comment Guidelines

      We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

      • Enrich the conversation
      • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
      • Be respectful. Even negative opinions can be framed positively and diplomatically.
      •  Use standard writing style. Include punctuation and upper and lower cases.
      • NOTE: Spam and/or promotional messages and links within a comment will be removed
      • Avoid profanity, slander or personal attacks directed at an author or another user.
      • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
      • Only English comments will be allowed.

      Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

      Drop an image here or Supported formats: *.jpg, *.png, *.gif up to 5mb

      Error: File type not supported

      Drop an image here or

      100
      Please try another search
  • Anil Kale @Anil Kale
    Sir plz your view on Zensartech
    Like 0
    • Aayush Khanna/Investing.com @Aayush Khanna/Investing.com
      Sure. Keep an eye on my next write-up :)
      Like 0

      • Comment Guidelines

      We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

      • Enrich the conversation
      • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
      • Be respectful. Even negative opinions can be framed positively and diplomatically.
      •  Use standard writing style. Include punctuation and upper and lower cases.
      • NOTE: Spam and/or promotional messages and links within a comment will be removed
      • Avoid profanity, slander or personal attacks directed at an author or another user.
      • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
      • Only English comments will be allowed.

      Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

      Drop an image here or Supported formats: *.jpg, *.png, *.gif up to 5mb

      Error: File type not supported

      Drop an image here or

      100
      Please try another search

Related Articles