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Retail Research: Technical Stock Idea
Retail Research: Technical Stock Idea
RETAIL RESEARCH
CMP
419.5
Recommended Action
Buy between 380 and 419.5
Target
450/490/570
Time Horizon
1-4 Months
Observations:
Tata Steel has been consistently making higher bottoms and higher tops since the last one year after touching a low of 200
during October 2015. The 200 levels also correspond to previous major intermediate lows of the stock, implying that the stock
has made a double bottom pattern on the long term charts.
In the last three months, the stock has been consolidating in a range between the 348-409 levels. Today, the stock has broken
out of this range on the back of higher than average volumes, thereby indicating that the bulls are having an upper hand on
the stock (See the chart above).
Technical indicators are currently giving positive signals as the stock trades above the short term (13 day SMA) and medium
term (50 day SMA) moving averages.
Momentum indicators like the 14-week RSI are in rising mode and not yet overbought. The 14-week RSI also trades above its
9-week EMA, which is a positive signal. The weekly stochastics indicator too is in rising mode and not yet in overbought
territory.
We believe the stock has the potential to move higher in the coming weeks and months as it attempts to test its previous
intermediate highs of 575. We therefore recommend a buy at CMP and adding more on dips. Our entry levels, along with stop
loss and targets have been mentioned above.
RETAIL RESEARCH
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RETAIL RESEARCH
RETAIL RESEARCH
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