Technical Analysis

Weekly trading guide: Asian Paints trades at new lifetime highs

Akhil Nallamuthu | Updated on December 05, 2020

Asian Paints (₹2,438.7)

The stock of Asian Paints, which had been consolidating for the past month between ₹2,150 and ₹2,250, broke out of the range last week. This has opened the door for further strengthening.

Even before entering the sideways path, the major trend of the stock had been bullish, and notably, it has been consistently bouncing off the price band between the 21- and 50-day moving averages. A similar reaction was observed during the final week of November. Also, since July, the scrip has been registering higher highs and higher lows, something synonymous with a bull trend.

Along with this, the recent breakout hints that the uptrend has regained fresh momentum. Hence, traders can buy the stock with a stop-loss of ₹2,320 for a potential target of ₹2,600.

SBI (₹263.5): Breaches a key barrier

Following a sluggish October, the stock of SBI picked up momentum in early November and established an uptrend. However, a couple of weeks ago, the bulls hit a roadblock at ₹250 and what followed was a horizontal price movement.

That is, the price was largely fluctuating between ₹238 and ₹250. But the stock saw a surge in price towards the end of last week. As a result, after two weeks of struggle, the key barrier at ₹250 now stands breached, paving the way for the bulls to build on more strength.

Interestingly, the stock has posted gains during the past five weeks, supporting the argument that the rally can be sustainable. So, one can go long on the stock with a stop-loss at ₹248, and look for ₹290 as target.

Maruti Suzuki (₹7,803.1): Moves out of consolidation range

The stock of Maruti Suzuki, which had been steadily gaining from its March lows of around ₹4,000, witnessed a correction in September after hitting a resistance at ₹7,300. During that phase, the scrip marked a low of ₹6,270.

But it recovered somewhat, and had been oscillating between ₹6,785 and ₹7,300 since early October. The price level of ₹7,300 had been acting as a strong hindrance for the stock for the past three months. However, confirming a breakout, the stock propelled past this level last week and even recorded a fresh lifetime high of ₹7,882.6 last Friday.

Taking these factors into account, the price is highly likely to accelerate from here. So, traders can initiate fresh buy positions on the stock with a stop-loss at ₹7,400 and set a target of ₹8,450.

Titan (₹1,437.1): Shoots through long-term resistance

Since breaking out of the triangle pattern — which indicated a bullish continuation — in July, the stock of Titan Company has made substantial progress. The stock, which was quoting at nearly ₹940 in July, has risen to over ₹1,400. In fact, it marked a fresh all-time high of ₹1,440.5 last week, after breaking out of the resistance band between ₹1,350 and ₹1,400.

The leg-up has been solid as the scrip has persistently bounced off its 50-day moving average. The recent breakout assumes more significance because the resistance at ₹1,400 has remained a major challenge for the stock for the past one-and-a-half years.

As the resistance at ₹1,400 is breached, go long with a stop-loss at ₹1,350. The stock can appreciate to ₹1,600.

UltraTech Cement (₹5,091.4): Breaks out with huge volumes

The stock of UltraTech Cement that witnessed a bullish reversal in March after taking support at ₹3,000, was treading sidewards between June and September. That is, the price was swaying back and forth between ₹3,750 and ₹4,200.

But a couple of months back, the stock broke out of the price band and began heading north. The rally looked steady and eventually moved past the prior high of ₹4,905 last week and went on to register a fresh lifetime high of ₹5,199 on Friday. Thus, the stock has also cracked the psychological hindrance of ₹5,000.

Moreover, the breakout is backed by massive volumes, which also confirms a bullish flag pattern on the daily chart. Hence, traders can buy the stock on declines with a stop-loss at ₹4,800 for a target of ₹5,500.

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Published on December 05, 2020
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