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The stock of Alkem Laboratories broke out of a resistance and hit a fresh all-time high of ₹3,341.7 on Tuesday, opening the door for further appreciation. Hence, the stock can be bought for the short-term.
The scrip, which saw a rally in the first two weeks of this year, witnessed a considerable drop in price after facing a roadblock at ₹3,150. It lost nearly 20 per cent as the price fell to ₹2,540 levels by the end of March. However, the stock quickly reversed the trend and started moving upwards. Since then, it has been steadily gaining and has been consistently making higher highs and higher lows.
The bullish bias is supported by the relative strength index as it remains in the positive zone and the moving average convergence divergence, which now shows a fresh uptick. Also, the average directional index shows that the uptrend possesses good strength and the breakout that occurred on Tuesday is accompanied by good volume. Hence, traders can go long in the stock with stop-loss at ₹3,200 for a target of ₹3,490.
(Note: The recommendations are based on technical analysis. There is a risk of loss in trading.)
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