A stock falls from above ₹4,200 to around ₹1,950. Then a strong green monthly candle appears, and the conversation changes overnight.
“Has the bottom formed?”
“Is this the right time to buy?”
My first question is different: Where does my analysis go wrong, and how much will that mistake cost me?
That is the important part of this TCS chart. The recovery deserves attention. The entry needs planning.
First, understand the recovery
On the monthly chart, TCS has been through a prolonged decline. The fall carried the stock from the ₹4,200 region towards ₹1,956, followed by a bounce, a retest near the lows and another recovery.
The latest candle shown on this chart is trading around ₹2,507. It is a strong response from the lower levels.
That tells us buyers have stepped in. Declaring the entire downtrend over requires more evidence.
A recovery within a downtrend can travel a considerable distance. For a trader, that movement can offer an opportunity. The quality of that opportunity depends on the entry price and the distance to the point where the setup fails.
₹2,550 is the area to watch
The immediate decision zone on my chart sits around ₹2,548–₹2,562.
Price is approaching this area from below. This is where I want to observe whether buyers can take control beyond the recent range.
A move above resistance is the first step. Sustaining above it, returning to test it and attracting buyers again would give the structure more strength.
The monthly candle shown here is still open. Its current appearance can change before the close, so I am reading this as a developing setup.
Why I have crossed out one trade
Look at the position marked on the right side of the chart.
An entry near ₹2,550, with a stop below the major low around ₹1,950, carries approximately ₹600 of risk per share. A move towards ₹3,280 offers roughly ₹730 of potential reward.
That works out to around 1.2 times the risk.
The stock could recover exactly as expected, and the trade could still be an inefficient use of capital. A stop that wide also makes the position harder to hold through normal price fluctuations.
This is a common mistake. We spend so much time deciding whether a stock will rise that we forget to examine the trade we are taking.
Being right about direction does not automatically give us a good entry.
The setup I would wait for
My preferred sequence is straightforward:
Price breaks above the ₹2,548–₹2,562 resistance zone.
A pullback tests the breakout area.
The pullback holds, and price breaks upward again.
That second breakout is where the setup becomes interesting to me. By then, we have a fresh structure against which to define risk.
The chart uses the ₹2,390 area as an illustrative lower risk reference. An entry around ₹2,550 with risk towards ₹2,390 would mean approximately ₹160 per share of risk. Against a projected move towards ₹3,280, that is roughly 4.5 times the risk.
These are planning figures. The actual pullback will decide the entry and stop. I would not force a stop at ₹2,390 simply to make the calculation attractive.
A small stop must have a structural reason.
What the harmonic projections add
The harmonic structures drawn on this chart identify potential resistance near ₹3,132, followed by the broader ₹3,280 region.
These areas give the recovery a framework. They help us assess the available room above an entry and identify where price may encounter selling.
They remain projected reaction zones. Price has to reach them, and its behaviour there will matter.
There is another useful lesson here: a bullish recovery trade can develop within a larger bearish structure. We do not need to call a permanent bottom to study that opportunity.
What would weaken this reading?
A rejection around ₹2,550 would leave resistance intact.
A breakout followed by a loss of the reclaimed zone would weaken the proposed setup. A move below the pullback low would invalidate the trade built around that particular structure.
The major low around ₹1,956 remains the broader reference on this chart. Using that distant low as the stop for every entry creates the risk problem illustrated on the right.
Each entry needs its own reason and its own failure point.
My view
TCS has produced a recovery worth tracking. The next useful information will come from its behaviour around ₹2,550.
I want to see whether price can break that area, hold a pullback and provide another upward trigger with manageable risk.
There will always be a stock moving without us. That is part of trading.
The expensive mistake is entering a move simply because we cannot tolerate watching it happen without us.
Disclaimer: This article interprets the supplied chart for educational purposes. Prices and projections refer to that chart and have not been independently verified against live market data. It is not a personalised investment recommendation or an assurance of returns.