Chart Example: Base 1 Breakout
- Rohit Musale, CFA
- Mar 18
- 2 min read
This is a weekly timeframe chart of Vedanta.
On 13 Nov 2025, the stock broke out of Base #1.
It then pulled back around 5%.
And
Continued its uptrend.
It went up around 45%, in less than 3 months.
During this journey, it never closed below the 10 week SMA.
The pale yellow line on the chart is the 10 WSMA.
Sometimes, a trader might think that,
when is stock is coming out of Base 1,
the moving averages on the daily timeframe chart might not be aligned properly, i.e
50 SMA > 150 SMA > 200 SMA (Proper Alignment)
The trader might think, may be its too early in the uptrend for the MAs to be aligned.
That is not the case here.
On 13 Nov 2025, all the three moving averages on the daily timeframe were aligned.
The day before on 12 Nov 2025, the volume was below average.
Hence I consider 13 Nov 2025 as the proper breakout day.
On that day, the stock closed above the weekly pivot point of 526.95.
The stock was already in a Confirmed Stage 2 Uptrend, during the breakout.
I personally chose to stay away from the stock.
Why ?
At that time, I felt the risk was not worth it.
Because,
The latest quarter reported EPS growth was negative.
However,
The market condition at that time was "Confirmed Uptrend" as per MarketSmith.
So, I could have chosen to take a swing trade here.
In a swing trade, I give less weightage to the fundamentals.
The RS rating of stock at that time was also well above 70.
It was my conscious choice to not take this swing trade,
because,
I could sense based on my daily analysis that the market condition was getting weaker by the day.
It does not show up immediately in the status at the MarketSmith site.
However, daily filtering of stocks reveals weakness in the market very easily.
The market continued to be in an uptrend till first week of Jan 2026.
However, since that time till now (18 March 2026), the market has never been in an uptrend.
It has continued to remain weak.
Can we say that I missed this opportunity ?
No.
Why ?
Because if I had bought this stock, I would have also had to buy similar stocks at that time which were fundamentally weak yet, technically strong.
10 stocks of this type if bought at that time would have collectively either lost me money or made no money.
Because,
market conditions continued to weaken after Nov 2025.
You have become a professional trader if you understood what I just said in the above 3-4 statements.
Trading is a game of probabilities.
You cannot look at one stock and conclude that you missed it.
The outcome on a single trade does not determine the effectiveness of a system.
Sometimes, the effectiveness of a system lies in avoid stocks rather than buying stocks.
I personally spend less time on what "I could have done"
I spend more time on what "I have actually done and how can I get better"
Regards,
Rohit Musale, CFA
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