Technical Analysis

Chart Focus - Blue Star: Buy

Yoganand D | Updated on May 12, 2019 Published on May 12, 2019

Investors with a medium-term perspective can consider buying the stock of Blue Star (₹750.9) at its current levels. Since taking support at ₹135 in early 2014, the stock has been in a long-term up-trend. But the stock encountered a key resistance at ₹840 in early January 2018. The stock tested this resistance in April 2018 and began to decline.

It was then on a medium-term corrective downtrend until it found support at ₹507 in October last year. This decline retraced almost 50 per cent f the Fibonacci retracement level of the prior uptrend. Subsequently, the stock changed direction and resumed the long-term uptrend. Since October, it has been in a medium-term uptrend. Moreover, the short-term trend is also up for the stock.

Witnessing buying interest, the stock conclusively breached the significant medium-term resistance at ₹700 last week by gaining 7.6 per cent. This rally has strengthened the stock’s medium-term uptrend and it appears to have resumed the long-term uptrend. The stock hovers well above the 50- and 200-day moving averages. The daily as well as the weekly relative strength indices feature in the bullish zone, backing the uptrend. The daily and weekly price rate of change indicators hover in the positive terrain, indicating buying interest.

Overall, after the break-out of the key barrier, the momentum is bullish for Blue Star, and the medium-term outlook is also bullish. The stock can continue to trend upwards and reach the price targets of ₹800 and ₹850 with a minor pause at around ₹800. Traders with a medium-term view can buy the stock with a stop-loss at ₹700.

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Published on May 12, 2019
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