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The outlook for the stock of Multi Commodity Exchange of India (MCX) is bullish. The stock is showing signs of a trend reversal. The stock has been on a strong downtrend since October last year. The price action within this downtrend since January indicates the formation of an inverted head and shoulder reversal pattern. This is a bullish pattern indicating the end of a downtrend.
The stock has broken the neckline resistance of this pattern poised around ₹815 earlier this week. While above this support, a rally to test the 200-day moving average resistance at ₹901 is possible in the coming days.
Though a pull-back move to ₹870 or ₹860 cannot be ruled out from around ₹900, the downside is expected to be limited. As such, an eventual break above ₹901 will pave way for the next targets of ₹940 and ₹950.
Traders with a short-term perspective can go long at current levels and also accumulate on dips at ₹840 and ₹820. Stop-loss can be placed at ₹805 for the target of ₹940. Revise the stop-loss higher to ₹885 as soon as the stock moves up to ₹895.
(Note: The recommendations are based on technical analysis. There is a risk of loss in trading.)
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