Technical Analysis

Stock trading call: Buy Dollar Industries

Yoganand D | Updated on February 22, 2020 Published on February 22, 2020

Dollar Industries (₹161): Buy

The stock of Dollar Industries jumped 6.7 per cent accompanied by above-average volume last Thursday, decisively breaking above a key hurdle at ₹155.

This rally provides investors with a medium-term perspective an opportunity to buy the stock at current levels. Although the long-term trend is down, the short-to-medium outlook is bullish for the stock.

Since recording a new high at ₹380 in August 2018, the stock has been in a long-term downtrend. However, it found support in December 2019, registering a new low at ₹129, and reversed direction, triggered by positive divergence in the daily relative strength index (RSI).

Thereafter, the stock started to consolidate sideways in a wide range between ₹129 and ₹155, until recently.

A key support at around ₹130 had provided cushion in early January and the stock began to trend upwards triggered by positive divergence in the weekly RSI. The stock has been in a short-term uptrend since then.

In early February, it surpassed the 21- and 50-day moving averages, and trade well above them.

Notably, there has been an increase in daily volume since early January, during the advance trading sessions.

The daily RSI has entered the bullish zone, backing the short-term uptrend, and the weekly RSI features in the neutral region. Besides, the daily as well as the weekly price rate of change indicators are featuring in the positive terrain, implying buying interest.

With the recent break-out of a key resistance at ₹155 and the indicators displaying bullish signs, the medium-term outlook appears to be bullish.

The stock can trend upwards and reach the targets of ₹180 and ₹190 in the medium term, with a minor pause at ₹180 levels. Investors can buy with a stop-loss at ₹146.

Published on February 22, 2020
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