Technical Analysis

Stock trading call: Buy MCX

Yoganand D | Updated on March 29, 2020 Published on March 29, 2020

Investors with a medium-term perspective can buy the stock of Multi Commodity Exchange of India (MCX) at current levels. The stock had encountered a key resistance at around ₹1,400 in late February and began to decline. Since then, it has been in a short-term downtrend.

It has decisively breached key supports at ₹1,200 and ₹1,100 while trending down. However, the stock found support at ₹805 on March 25 and reversed direction, triggered by positive divergence in the daily relative strength index (RSI).

Also, it formed a bullish engulfing candlestick pattern in that session, which is a bullish reversal pattern.

Amid volatility, the stock jumped 10.6 per cent accompanied by above-average volume on Friday, breaching a key resistance at ₹1,000.

There has been an increase in daily volumes over the past week.

The daily RSI has entered the neutral region from the bearish zone and the weekly RSI hovers in the neutral region. The daily price rate of change indicator is recovering from the oversold territory.

Taking a contrarian stance, the short- to medium-term outlook appears to be bullish for the MCX stock.

It now tests a key resistance at ₹1,100. An emphatic break above this barrier can take the stock northwards to ₹1,150 and then to ₹1,200 over the medium term. Investors with a medium-term horizon can buy the stock with a stop-loss at ₹950 level.

Published on March 29, 2020

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