Technical Analysis

Trading pick of the week: Buy Petronet LNG

Yoganand D | Updated on July 05, 2020

Petronet LNG terminal

Investors with a medium-term perspective can buy the stock of Petronet LNG at current levels. The stock found support at ₹171 in late March 2020 and ended a medium-term downtrend.

Subsequently, it changed direction, triggered by positive divergence on the daily relative strength index (RSI).

Since then, the stock has been on a medium-term uptrend. While trending up, it decisively breached a key long-term resistance at around ₹224 in late April, which had turned into a key support and provided base in mid-May.

Thereafter, the stock continued to trend upwards and has been on a short-term uptrend. But it encountered a key resistance at ₹260 in early June and was testing this barrier over the past four weeks. On Friday, the stock surged 4.4 per cent with good volume, conclusively breaking above this hurdle.

This rally has underpinned the bullish momentum. Also, the stock trades well above its 50- and 200-day moving averages. There has been an increase in daily volume over the past one week, strengthening the uptrend.

The daily RSI has re-entered the bullish zone and the weekly RSI has just entered the bullish zone after a long period. Besides, the daily as well as the weekly price rate of change indicators are hovering in the positive terrain, implying buying interest.

The medium-term outlook is bullish for Petronet LNG. The targets are ₹300 and ₹320 with a minor pause at ₹300. Traders can buy with a stop-loss at ₹247.

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Published on July 05, 2020
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