Technical Analysis

Chart Focus: Ashok Leyland (₹69.2): Buy

Yoganand D | Updated on September 22, 2019 Published on September 22, 2019

Investors with a medium-term perspective also with a contrarian view can buy the stock of Ashok Leyland at current levels.

Since recording a new high at ₹167 in May 2018, the stock has been in a long-term downtrend. Medium-term trend is also down.

Nevertheless, the stock recorded a multi-year low and found support at ₹56.9 in late August this year and began to move sideways in the band between ₹57 and ₹67 thereafter. After taking support from the lower boundary, the stock jumped 18.7 per cent, accompanied by extra-ordinary volume on Friday.

This rally has emphatically breached the key resistance at ₹62 and the upper boundary at ₹67. Also, the stock breached its 21-day moving average and managed to close above the 50-day moving average line.

 

 

Over the past one month, there has been an increase in daily volume traded. The daily relative strength index is on the brink of entering the bullish zone from the neutral region, and the weekly RSI is likely to enter the neutral region from the bearish zone.

Moreover, the daily price rate of change indicator hovers in the positive terrain, implying buying interest, and the weekly counterpart is recovering from the oversold territory.

Taking a contrarian stance, the medium-term outlook appears to be bullish for Ashok Leyland. The stock can extend the rally and reach the price targets of ₹76 and ₹82 over the medium term, with a minor breather at around ₹76.

Traders with a medium-term view can buy the stock with a stop-loss at ₹63.

Published on September 22, 2019
This article is closed for comments.
Please Email the Editor