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Investors with short-term perspective can consider buying the stock of Neyveli Lignite Corporation. It is seen from the charts of the stock that it appears to have bottomed out in November 2011, after taking support at its long-term base level at around Rs 68. Since then, the stock has been on a short-term uptrend.
The stock's reversal was triggered by positive divergence in daily as well as weekly moving average convergence divergence indicator and weekly relative strength index. Moreover, we notice formation of a falling wedge pattern, which acts as a bottom reversal pattern in this scenario.
On Wednesday, the stock emphatically broke out of the falling wedge pattern by jumping five per cent with extraordinary volume. The stock also penetrated its 50-day moving average conclusively. The daily RSI has entered into the bullish zone from the neutral region and weekly RSI has entered into the neutral region from the bearish zone.
The daily price rate of change indicator is featuring in the positive area implying buying interest. We are bullish on the stock from a short-term perspective. We anticipate the stock's up move to prolong and touch our price target of Rs 82 or Rs 84 in the upcoming trading sessions. Short-term perspective traders can buy the stock with stop-loss at Rs 77.
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