Relative Strength (RS) holding above EMAs is NOT enough ❌❌
If you're just blindly adding names to your watchlist based on these two metrics, you are likely walking into a distribution trap.
Let’s look at the fatal flaws in Sandhar Tech's structure:
1. The Death of the "Upward Flag"
Not all consolidations are created equal.
There are three main types of flags you need to recognize:
- Downward Flag: Stock pulls back orderly to let the EMAs catch up (e.g., Vindhya Telelinks, SPARC). High win-rate.
- Flat Consolidation: Stock tightens right near the swing highs, waiting for the EMA (e.g., SOTL, JNK India). High win-rate.
- Upward Flag: Stock drifts higher at an angle, sliding with the rising EMAs (e.g., Sandhar Tech, Garware Hi-Tech). Worst win-rate.
Why? An upward flag signals buying exhaustion.
The buyers are burning energy just to crawl sideways-up, leaving no fuel left for an actual explosive breakout.
2. The Friday Divergence
On Friday, the entire market witnessed a ferocious buying day.
Sandhar Tech? It saw more than average selling.
Volume was well above average on a down day.
Ask yourself: Who is in such a massive hurry to get out on a green market day?
3. The Confirmation
Today, it broke Friday’s low. In a market where almost nothing is breaking friday's low, Sandhar did.
The Takeaway:
Never prioritize a isolated RS metric over the structural reality of the chart.
High RS in a bad structure is just an illusion.
Trading is a game of probabilities. Don't force yourself into setups where the math is actively stacked against you.
👇 Drop your thoughts below. Are you still buying upward flags?
Sandhar tech is flagging upwards with selling even on Friday
What do you see here