We recommend a buy in the stock of CMC from a short-term perspective. It is evident from the charts of the stock that after registering an all-time high at Rs 1,523 in early April, the stock started to decline. However, it found support around Rs 1,200 in early June, after retracing 38.2 per cent Fibonacci retracement of its prior uptrend.
After testing this support level multiple times, the stock jumped 5 per cent with good volume, breaching its 200-day moving average on Thursday. Both daily and weekly relative strength indices are climbing higher in the neutral region towards the bullish zone. The daily moving average convergence divergence indicator is moving higher in line with the stock price. The daily price rate of change indicator is featuring in the positive terrain implying buying interest.
We are bullish on the stock from a short-term perspective as it is reversing higher from a significant support level. We expect its up move to continue and reach our price target of Rs 1,325 or Rs 1,345 in the ensuing trading sessions. Traders with short-term perspective can consider buying the stock with stop-loss at Rs 1,263.
( Note: The recommendations are based on technical analysis. There is a risk of loss in trading.)