Short-term traders can look to buy the stock for a possible target of Rs 380 in the next 1-2 months, they say.
The fertilizer stock hit a 52-week high of Rs 324 on 13th December 2022, but it failed to hold on to the momentum.
It has given a breakout from an Ascending formation last week. If the stock manages to hold on to 280 levels, bulls could regain control and push the stock price to a fresh 52-week high.
The stock formed a Double Bottom pattern around 250 once in March and then again in August 2023 and then bounced back. The neckline of the pattern was placed above 312 levels.
The stock did manage to break out from the same last week, but it briefly fell this week a mid profit-taking – in line with the trend seen in broader markets.
The stock witnessed a Golden Crossover formation earlier in November which added further momentum to the stock price.In terms of price action, it is now trading above most of the crucial short- and long-term moving averages such as 5,10,30,50,100, and 200-DMA which is a positive sign for the bulls.
The daily Relative Strength Index (RSI) is at 62.7. RSI below 30 is oversold and above 70 is considered overbought, Trendlyne data showed. The daily MACD is above its center and signal Line, this is a bullish indicator.
“Chambal Fertilisers was one of the worst underperformers from May 2022. It has corrected over 50% in the 2-month time frame, the stock price went down from 516 odd to a 52-week low around 260 in July 2022,” Kiran Jani CIRA, Head of Technical Research at Jainam Broking Limited, said.
“Post registering a 52-week low around 260, stock prices were into a time correction phase since then. During that time, we had witnessed the range from 260 to 300. However, for the past couple of months it has started trading into rising and made a big ascending triangle pattern,” he said.
Since July 2023 we are seeing prices have started moving up in a higher top / higher bottom pattern and registered a 23% gain in the last 4 months.
“At the current juncture, we can see a re-testing of the previous resistance zone with bullish divergence visible on the chart. The price has given a breakout from an ascending pattern and from the recent high rested same breakout,” highlights Jani.
“We are seeing trading above its 50 and 200 SMA for a long time. Looking at the relative strength index (RSI-14) is showing the bullish hidden divergences,” he said.
“So ahead of budget, election 2024, and considering the current chart pattern we are expecting prices to touch 380 if prices hold 280 levels,” recommended Jani.
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(Disclaimer: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of the Economic Times)