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We recommend a buy in the stock of Orchid Chemicals and Pharmaceuticals from a short-term horizon. It is apparent from the charts of the stock that after encountering resistance at around Rs 320 in May, the stock started to decline and was on an intermediate-term downtrend until it found support at its long-term base level at around Rs 145 in early October.
Nevertheless, the stock bounced up from its key support triggered by positive divergence in daily moving average convergence divergence indicators. Moreover, weekly relative strength index and weekly price rate of change indicator is displaying positive divergence backing the stock's trend reversal.
Since early October, the stock has been on a nascent short-term uptrend. On November 1, the stock surged six per cent accompanied by extraordinary volumes, penetrating its immediate resistance and downtrend-line at around Rs 172. Daily RSI is heading towards the bullish zone in the neutral region and weekly RSI is on the brink of entering into the neutral region from the bearish zone. The daily price rate of change indicator has entered into the positive terrain implying buying interest.
We are bullish on the stock from a short-term perspective. We anticipate its up move to continue until it touches our price target of Rs 181 or Rs 187 in the upcoming trading sessions. Traders with short-term perspective can buy the stock with stop-loss at Rs 171.5.
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