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HCL Technologies recorded a sharp reversal on Monday gaining Rs 27 or seven per cent. The daily candlestick chart shows a bullish engulfing candle as well as a morning star pattern that is a signal of a short-term trend reversal.
The medium-term trend in the stock is down since the peak of Rs 522 recorded in July. This fall is halting at the key medium-term support of Rs 367 that is the trough formed in November 2010. This support is also important from a long-term perspective as it occurs at 38.2 per cent retracement of the rally from March 2009 low of Rs 86. It is possible that the stock starts a short-term uptrend from this buttress.
That the oscillators in the daily chart are reversing from oversold levels is a positive for the stock. Relative strength index in the daily chart is beginning to look up after recording a low at 19. Price rate of change oscillator in the daily chart is forming rising troughs since the first week of August that reflects lack of downward momentum.
The stock could attempt to make further headway in the days ahead. Traders with short-term perspective can buy the stock with stop at Rs 380. Upward targets are Rs 399 and Rs 423.
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