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Investors with a short-term perspective can buy the stock of Edelweiss Financial Services at current levels. In early November 2020, the stock took support at ₹50 and started to trend upwards. Since then, the stock has been on a medium term uptrend. After a corrective decline from the December 2020 high of ₹83.8, the stock found support at around ₹62 in early February, retracing 61.8 per cent fibonacci retracement level of the prior up-move.
The key support at ₹62 provided cushion in late February and the stock continued to trend upwards. It had decisively breached the 21- and 50-day moving averages and paused early this week forming a flag pattern. On Wednesday, the stock jumped 10 per cent with extraordinary volume, breaking out of the flag pattern which is a continuation pattern and a key resistance at ₹72. This rally has strengthened the short term uptrend.
Backing the rally, the daily relative strength index has entered the bullish zone from the neutral region and the weekly RSI is moving higher towards the bullish zone. Further, the daily and the weekly price rate of change indicators hover in the positive territory signifying buying interest. The short-term outlook is bullish. Targets are ₹80 and ₹82. Traders can buy with a stop-loss at ₹74.5 levels.
(Note: The recommendations are based on technical analysis. There is a risk of loss in trading)
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