Technical Analysis

Trading pick of the week: Buy Bharat Forge

Yoganand D | Updated on May 31, 2020

Investors with a medium-term perspective can buy the stock of Bharat Forge at current levels.

Following a medium-term downtrend from the key resistance level at around ₹530 encountered in early February, the stock recorded a 52-week low at ₹207.8 early April.

Subsequently, the stock changed direction, triggered by positive divergence on the daily relative strength index and price rate of change indicator.

Since then, the stock has been trending upwards.

Last Friday it jumped 6.5 per cent with above-average volume, breaking above a key resistance level of ₹310. Last week, the stock gained 15 per cent — this rally has strengthened the uptrend that has been in place since early April.

Also, it has surpassed the 21- and 50-day moving averages and trades well above them.

Moreover, there has been an increase in daily volume since early April.

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.

Besides, the daily price rate of change indicator features in the positive terrain and the weekly counterpart has entered the positive terrain, implying buying interest.

Overall, the medium-term outlook is bullish for Bharat Forge. It can extend the on-going uptrend and reach the price targets of ₹350 and ₹380 in the ensuing weeks, with a minor pause at ₹350. Traders can buy the stock with a stop-loss at ₹303.

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Published on May 31, 2020
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