Technical Analysis

Chart Focus: Jindal Steel (₹123.3): Buy

Yoganand D | Updated on November 04, 2019 Published on November 03, 2019

Jindal Steel and Power (JSPL)

The stock of Jindal Steel & Power jumped 6 per cent on Friday, breaking above a key resistance at ₹115. This rally has altered the medium-term outlook from sideways to bullish, and provides investors — with a medium-term perspective — an opportunity to buy the stock at current levels.

Following an intermediate-term downtrend, the stock took support at around ₹94 in August this year. Subsequently, the stock started to move sideways in the band between ₹94 and ₹115 for almost three months.

 

 

During this sideways consolidation phase, the stock had formed a double bottom pattern with neck-line placed at ₹115. This is a bottom reversal pattern and has bullish implications. In late October, the stock had decisively breached its 21- and 50-day moving averages and now trades well above these levels.

Over the past three months, there has been an increase in daily volumes backing the pattern. Last week, the stock zoomed 15 per cent, conclusively breaking above the neck-line as well as a key resistance at ₹115. The daily relative strength index has entered the bullish zone from the neutral region.

Moreover, the weekly RSI is displaying a positive divergence, backing the trend reversal. It has entered the neutral region from the bearish zone. However, a minor pull-back or correction in the near-term cannot be ruled out, which investors can use to buy the stock. Medium-term targets are ₹134 and ₹144.

Investors can buy with a stop-loss at ₹113.

Published on November 03, 2019
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