Technical Analysis

Vedanta (₹166.1): Buy

Yoganand D | Updated on September 27, 2019 Published on September 27, 2019

The stock of Vedanta jumped 6.5 per cent accompanied by above average volume on Thursday breaking above a key resistance at ₹160 as well as a flag pattern. This pattern is a continuation pattern which implies preceding trend will continue. In this case, the previous trend is up and the stock will extend the uptrend.

Following a sharp fall in the months of July and August, the stock found support at ₹130 in late August. It changed direction thereafter triggered by a positive divergence in the daily price rate of change indicator. Since then, the stock has been in a short-term uptrend. During the uptrend, the stock decisively breached its 21- and 50-day moving averages and trades well above them. After a minor pause at ₹160, the stock formed the flag pattern and resumed the uptrend recently.

There has been an increase in daily volume over the past one week. The daily relative strength index hovers in the bullish zone. Also, the daily and the weekly price rate of change indicators feature in the positive territory implying buying interest.

Outlook is bullish. Targets are ₹173 and ₹176.5. Traders with a short-term perspective can buy with a stop-loss at ₹162.5.

(Note: The recommendations are based on technical analysis. There is a risk of loss in trading.)

Published on September 27, 2019
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