STOCK STRAT­EGY

Flash News Investment - - TECHNICALS -

✓ Cur­rent Ob­ser­va­tion: The stock, af­ter reg­is­ter­ing a high of Rs 223.90 in the first half of May 2017, en­tered into a cor­rec­tion phase and the stock marked a se­ries of lower tops and lower bot­toms on the higher time frame. The cor­rec­tion halted around the level of Rs 89 and the stock en­tered into a pull­back rally and went on to touch the level of Rs 122.75. How­ever, it failed to sus­tain at the higher lev­els and dropped back to the level of Rs 94, thus mark­ing a dou­ble bot­tom-like pat­tern on the higher time frame.

✓ The stock has also wit­nessed break­out of multi-touch point down­ward slop­ing trend­line con­nect­ing highs of May 2017, Novem­ber 2017, Jan­uary 2018 and Septem­ber 2018 along with de­cent vol­umes. There­after, the stock has wit­nessed fol­low-up buy­ing, which in­di­cates strength in the break­out.

✓ On the daily time frame, the stock is trad­ing above its cru­cial mov­ing av­er­ages, i.e. 100-day SMA and 200-day SMA.

✓ In the cur­rent sce­nario, the RSI on the weekly time frame is inch­ing higher, which is pos­i­tive for the stock.

✓ The stock has strong sup­port around the level of Rs 114 and the same can be main­tained as a stop loss level.

✓ On the up­side, the stock has the po­ten­tial to test the level of Rs 137, fol­lowed by Rs 144.

✓ Con­clu­sion: Con­sid­er­ing that the stock has wit­nessed break­out of multi-touch point down­ward slop­ing trend­line in the higher time frame and the stock is trad­ing above its cru­cial mov­ing av­er­ages on the daily time frame, we would rec­om­mend buy­ing this stock for a short-medium term pe­riod with a stop loss of Rs 114 on a clos­ing ba­sis and with an up­side tar­get of Rs 137, fol­lowed by Rs 144.

REC LTD

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