Investors with a short-term trading perspective can buy the stock of Elecon Engineering Company. It is apparent from the charts of the stock that after encountering key long-term resistance at Rs 104 in October 2010, the stock changed direction and started to decline. It was on a medium-term downtrend until it found support at its significant long-term support level of Rs 60 on February 9. Subsequently, the stock did a volte-face triggered by positive divergence displayed in the daily moving average convergence divergence and price rate of change indicators. Since then, the stock has been on a short-term uptrend backed with good volumes. On February 15, the stock jumped 7.5 per cent with above average volumes breaking through its medium-term downtrend-line and immediate resistance around Rs 71 conclusively. The 14 day relative strength index is on the brink of entering the bullish zone and the weekly RSI has entered the neutral region from the bearish zone. Daily MACD has signalled a buy and is inching upwards. Our short-term outlook is bullish on the stock. We expect its rally to prolong until it touches our price target of Rs 76 or Rs 78. Short-term perspective traders can consider buying the stock with stop-loss at Rs 71.5.

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