Technical Analysis

Stock trading call: Buy Hindustan Copper

Yoganand D | Updated on January 05, 2020 Published on January 05, 2020

The Hindustan Copper stock sky-rocketed almost 20 per cent accompanied by extraordinary volume in the past week, breaking above a key resistance at ₹43.5.

This rally provides a buying opportunity for investors with a medium-term perspective. In August 2019, the stock recorded a 52-week low at ₹27.9 and started to move sideways.

It then took support at around ₹28 in early October and began trending upwards. Since then, the stock has been in a medium-term uptrend. After testing the moving average compression (21-, 50- and 200-day moving averages) at around ₹39 for more than two weeks, the stock breached it decisively last Thursday by jumping 20 per cent in that session. Moreover, it also made an emphatic break-out of a key long-term resistance at ₹43.5 in that session.

 

 

The stock trades well above its 50- and 200-day moving averages. There has been an increase in daily volumes over the past three trading sessions. The daily relative strength index (RSI) features in the bullish zone and the weekly RSI has just entered this zone from the neutral region.

Further, the daily as well as the weekly price rate-of-change indicators hover in the positive terrain, implying buying interest.

With the conclusive break-out of the long-term resistance and indicators showing bullish momentum, the medium-term outlook is bullish for the stock.

It has the potential to trend upwards and reach the price targets of ₹52 and ₹56 in the upcoming trading sessions. Traders can buy with a deep stop-loss at ₹42.

Published on January 05, 2020
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