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Investors with a short-term perspective can buy the stock of Biocon at current levels. Following an intermediate-term downtrend, the stock found support at ₹211 in mid-August which is also the 52-week low. Subsequently, the stock began to move sideways.
The price action over the past two months displays formation of a double bottom pattern with the neck-line at ₹236 levels. This pattern is a bullish reversal pattern.
On Thursday, the stock managed to decisively close above the neck-line by gaining 2.85 per cent accompanied by above average volume. Moreover, the stock has also conclusively closed above the 21- and 50-day moving averages.
There has been an increase in daily volume over the past one week. The daily relative strength index has entered the bullish zone from the neutral region. The weekly RSI is showing positive divergence backing the trend reversal and has entered the neutral region from the bearish zone. Also, the daily as well as the weekly price rate of change indicators are featuring in the positive terrain indicating buying interest.
The short-term outlook is bullish for Biocon. Traders can buy the stock with a stop-loss at ₹235. Targets are ₹250 and ₹255.
(Note: The recommendations are based on technical analysis. There is a risk of loss in trading.)
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