Tata Elxsi’s sharp 4.9 per cent rally on Monday is turning the outlook bullish for the stock. This offers a good opportunity for short-term trader to take long positions. After tumbling about 20 per cent in March, the stock found support near the 32.8 per cent Fibonacci retracement level of ₹545. Since then, it had traded sideways between ₹530 and ₹580 thereby forming a strong base near the above mentioned Fibonacci support level. Though the stock still remains within the range, Monday’s strong rise has decisively broken the 21-day moving average resistance at ₹557.7. The strong volume that accompanied this breakout has increased the probability for a break above ₹580.
Immediate resistance for the stock is at ₹592.5. A breach of this resistance can take it higher to ₹626.5 in the coming days. Short-term traders can go long with a stop-loss at ₹568 for the target of ₹592. Traders with high risk appetite can hold their long positions with a wide stop-loss at ₹538 for the target of ₹620.
(Note: The recommendations are based on technical analysis. There is a risk of loss in trading.)