Technical Analysis

Cipla (₹543.5): Buy

Yoganand D BL Research Bureau | Updated on February 13, 2019 Published on February 14, 2019

Investors with a short-term perspective can buy the stock of Cipla at current levels. After an intermediate-term downtrend from the September 2018 high at around ₹678, the stock found support at ₹483 in late January this year. The stock subsequently changed direction triggered by a positive divergence in the daily moving average convergence-divergence and the weekly relative strength index. Since recording a 52-week low at ₹483, the stock has been in a near-term uptrend.

On February 6, the stock jumped 5.3 per cent accompanied by extraordinary volume, breaching its 21- and 50-day moving averages. There has been an increase in daily volume over the past one week. The daily relative strength index features in the bullish zone and the weekly RSI hovers in the neutral region with an upward bias. Also, the daily and the weekly price rate of change indicators feature in the positive territory implying buying interest.

The stock now faces a key resistance ahead at ₹550 with a positive bias. The short-term outlook is bullish for the stock and it has potential to surpass this immediate resistance. Targets are ₹565 and ₹577. Traders can buy with a stop-loss at ₹532.

(Note: The recommendations are based on technical analysis. There is a risk of loss in trading.)

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