After forming a head and shoulder pattern spanning early May and early July this year, the stock broke through this pattern. It was on a medium-term downtrend. Nevertheless, it found support at its significant long-term base zone between Rs 350 and Rs 370 recently.

The stock rebounded 14 per cent with good volumes last week, conclusively penetrating its medium-term downtrend line. It can move higher and encounter resistance at around Rs 450 and the next significant resistance is at Rs 500. Only a strong breakthrough of Rs 500 will pave way for a rally to Rs 600 in the ensuing months. On the other hand, tumble below Rs 350 can drag the stock down to Rs 310 and Rs 280 or even to Rs 240 in the medium-term.

Opto Circuits (Rs 241.3)

Opto Circuits zoomed 15 per cent accompanied by good volumes after taking support from its long-term significant support level at Rs 210. It appears to have changed its trend upwards from a short-term perspective; a positive divergence in the daily relative strength index backs this reversal. However, the stock is currently testing resistance at around Rs 240.

A decisive breach of this level will reinforce the short-term up move and lift the stock upwards to Rs 265. Next key resistance above Rs 265 is at Rs 290. Failure to move above the aforesaid resistance can pull the stock down to Rs 220 and then to Rs 210 in the short-term.

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