Technical Analysis

Stocks that will see action this week - January 18-22

Akhil Nallamuthu | Updated on January 16, 2021

Tata Steel (₹705.9): Likely to resume uptrend

Tata Steel has been one of the best-performing large-cap stocks since the March 2020 lows. The stock, after marking a low ₹250.8, established a solid uptrend — this resulted in it marking a fresh 52-week high of ₹731.5 in early January.

It then gradually softened, and on Friday, closed at ₹705.9. That means, from its lows, the stock price has multiplied nearly thrice. Though it has been consolidating over the past week, the major trend remains bullish and the likelihood of further gains is high.

The relative strength index and the moving average convergence divergence indicator lie in their bullish territory. Until the price stays above the 21-day moving average, the uptrend will be intact. Hence, traders can buy with a stop-loss at ₹670 for a target of ₹745.

Piramal Enterprises (₹1,625.1): Sees fresh breakout

Bulls seem to have found a way to get the stock out of a sideways trend, within which it had been trading for the past six months. Since mid-July, the stock had been unable to establish a trend in either sides and was largely fluctuating within ₹1,200 and ₹1,550.

Though it had showed signs of a decline a month ago, it managed to arrest the decline as ₹1,300 acted as a considerable support. Bouncing off from that level, the stock gained steadily, and last week, it broke out of the resistance at ₹1,550 and closed at ₹1,625 on Friday.

This has opened the door for further gains, and the breakout looks reliable as it was accompanied by large volume. So, traders can be bullish and go long with a stop-loss at ₹1,550 for a target of ₹1,720.

Godrej Consumer Products (₹780.1): Confirms an inverted head and shoulders

As it faced considerable selling pressure in October last year, the stock of Godrej Consumer Products fell from ₹762 to mark a low of ₹653.6 by the end of the month. Since the ₹650 level is a strong support, bulls took it to their advantage and started to push the price higher.

The stock then started to rally, and last week, it breached its prior high of ₹762 and closed at ₹780. With this breakout, the stock has confirmed an inverted head and shoulders pattern on the weekly chart, implying that it has turned the medium-term trend positive.

The volume has been steadily increasing over the past three weeks, which makes the breakout durable. Traders can take a bullish view on the stock and buy with a stop-loss at ₹750 for a target of ₹825.

Bandhan Bank (₹368.5): Shows signs of bearish reversal

The stock of Bandhan Bank, after registering a high of ₹430.7 a month ago, declined as bulls failed to extend the rally. In the first week of January, the stock made a second attempt to make higher highs.

But again, it fell short of even testing the prior high and reversed downwards from ₹424.9. The scrip then witnessed a sharp depreciation, and currently hovers around the previous low. Thus, the stock has formed a double top pattern on the daily chart, indicating a possible bearish trend-reversal.

Supporting this view, the relative strength index and the moving average convergence divergence indicators on the daily chart are exhibiting weakness. Also, the price is now below the 50-day moving average. So, traders can short with a stop-loss at ₹390 for a target of ₹335.

Adani Green Energy (₹947.7): Breaches a critical support

The stock of Adani Green Energy has been on a decline since late November 2020. Even when the broader market started recovering in mid-December after a blip, the stock failed to replicate it. Though it inched up a little, the stock gave up its gain quickly and consequently made a lower low last week by breaching the earlier low of ₹1,040.

Notably, the scrip broke below the psychological support level of ₹1,000 as it closed at ₹947.7 on Friday. And this occurred with huge volume. Moreover, both the relative strength index and the moving average convergence divergence indicator on the daily chart have slipped into bearish territory.

Thus, the outlook has turned bearish for the stock. On the back of this, traders can sell the stock with a stop-loss at ₹1,040 for a target of ₹825.

Published on January 16, 2021

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