Technical Analysis

Chart Focus: Chambal Fertilisers and Chemicals (₹149.1): Buy

Yoganand D | Updated on August 25, 2019 Published on August 25, 2019

 

The stock of Chambal Fertilisers and Chemicals gained 9.7 per cent, accompanied by above-average volume, on Friday, bouncing from a significant long-term support at ₹135.

With this rally, the stock managed to erode the intra-week loss, and closed in green, forming a hammer candlestick pattern in the weekly chart, which is a bullish reversal pattern. This, coupled with a reversal from the long-term support, provides investors with a medium-term horizon — an opportunity to buy the stock at current levels.

After recording a 52-week high at ₹196 in early this June, the stock began to decline steadily, breaching a key support at ₹170 and ₹158. But it found support at the long-term base level of ₹135, which has cushioned the stock in the past.

Triggered by positive divergence displayed in the daily relative strength index and price rate of change indicator, the stock changed direction recently.

 

 

The daily RSI has entered the neutral region from the bearish zone. Also, the daily price rate of change has moved into the positive terrain, implying buying interest.

Taking a contrarian stance, the medium-term outlook appears to be bullish for Chambal Fertilisers and Chemicals.

The stock can continue to trend upwards and reach the price targets of ₹169 and ₹178 in the medium term, with a minor breather at around ₹160.

Traders with a medium-term view can buy the stock with a stop-loss at ₹137.

Published on August 25, 2019
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