Technical Analysis

Chart Focus - Oil India (₹172.9): Buy

Yoganand D | Updated on October 20, 2019 Published on October 20, 2019

Investors with a medium-term perspective can buy the stock of Oil India at current levels. Following a long-term downtrend, the stock registered an all-time low at ₹139.6 in late August, and thereafter it started to move sideways in a narrow band between ₹140 and ₹155 for almost two months. The long-term downtrend appears to have come to a halt.

Last week, the stock decisively broke out of this sideways consolidation phase on the upside and gained 16 per cent accompanied by good volume.

The medium-term downtrend that was in place since the stock encountered a key resistance at ₹185 in late May this year, took support at around ₹140 and ended in September. Subsequently, it changed direction, triggered by positive divergence in the weekly relative strength index and price rate-of- change indicator.

 

 

The stock is currently in a budding uptrend. While trending up, it breached a key resistance at ₹155 early last week. On Friday, the stock jumped 5.7 per cent with good volume, breaking another key barrier at ₹167 and also the 200-day moving average. The stock trades well above the 50- and 200-day moving averages.

The daily RSI features in the bullish zone and the weekly RSI is on the brink of entering the bullish zone from the neutral region. Besides, the daily as well as the weekly price rate-of-change indicators are hovering in the positive territory.

The medium-term outlook is bullish for Oil India. It can continue to trend upwards with a pause at ₹185, for a medium-term target of ₹200. Investors can buy with a deep stop-loss ₹155.

Published on October 20, 2019
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