The share price increased from Rs 859 recorded on July 12 to Rs 1,119 on August 12, which is an increase of more than 30% in a month.
The strong price action helped the stock break out of the double bottom resistance line on the weekly chart, providing a signal of strength.
The neckline of the double bottom is placed below the Rs 1,100 level. Shares closed with a gain of nearly 9% in a week.
Double bottom is formed at the bottom and indicates the end of a bear market. The pattern is formed by two clear bottoms separated by a peak.
The confirmation occurs when the price breaks above the confirmation line.
Short-term traders could consider buying the stock now or bearish with a target of maybe Rs 1,500 in the next 1-2 months, experts suggest.
The Relative Strength Index (RSI) is at 75.3. RSI above 70 is considered overbought. This implies that the stock may show a pullback. MACD is above its centerline and signal line, which is a bullish indicator.
On the price front, the stock is trading above all the important short-term and long-term moving averages such as the 5,10,20,30,50,100 and 200-DMA, which is a positive sign for the bulls. .
In the weekly time frame, the price is in a strong uptrend from May 2020, the After September 2021 price sees the trend pause. The price is currently trading at an all-time high, which shows that the price is in a strong bullish momentum.
Vidnyan Sawant, AVP – Technical Research, GEPL Capital, said: “Last week, prices broke out of a double bottom, which shows that prices have started a new uptrend.
On the daily chart we can observe that the volume is increasing along with the Price, which confirms that the demand is pushing the price higher.
The Bollinger Bands on the daily timeframe have started to widen, which shows that price volatility is increasing for a bullish move.
“The RSI in the weekly time frame offered a breakout, which once again shows that the price has strong momentum in it. In the near term, we expect the price to move higher until Rs 1,500, we recommend a stop loss of Rs 1,000, on a close basis,” he said.
“Confirmation occurs when price breaks above the top (i.e. confirmation line). Most of the rules regarding double top formation can also be applied to double bottoms,” recommends Sawant.
(Disclaimer: The recommendations, suggestions, views and opinions expressed by the experts are their own. They do not represent the views of the Economic Times.)