Technical Analysis

Stock trading call: Buy RSWM

Yoganand D | Updated on February 16, 2020 Published on February 16, 2020

Investors with a medium-term perspective can buy the stock of RSWM, a small-cap company, at current levels.

The stock has skyrocketed 30 per cent, accompanied by good volume over the past two trading sessions, to decisively break above a key resistance at ₹105.

The intermediate- and medium-term trends are down for the stock, but the short-term trend is up.

The recent rally of the stock has conclusively broke out of a downward sloping channel that had been in place since September, 2019. In mid-December 2019, the stock recorded a 52-week low at ₹85, but changed direction, triggered by positive divergence in the weekly relative strength index (RSI) and price rate of change indicator. Since then, the stock has been trending upwards.

The ongoing rally has breached the 21-day and 50-day moving averages. The stock trades well above them.

The daily RSI has entered the bullish zone from the neutral region and the weekly RSI has entered the neutral region from the bearish zone. The daily and the weekly price rate of change indicators are hovering in the positive terrain, implying buying interest.

With the stock breaking out of a descending channel and a key resistance level, its short-term outlook is bullish.

It has the potential to trend upwards and reach the targets of ₹130 and ₹140 in the medium term with a minor pause at around ₹130.

Traders can buy the stock with a stop-loss at ₹105.

Published on February 16, 2020
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