Investors with a short-term perspective can consider buying the stock of Elecon Engineering Company at current levels. The stock surged 4.6 per cent with above average volume on Monday, breaching a key immediate resistance at ₹60.
In late March 2017, the stock found support at around ₹51 and started to trend upwards. Since then, the stock has been on a medium-term uptrend. While trending up, the stock breached key resistances at ₹56 and then ₹60 in the month of April. However, the stock encountered resistance at ₹64 and began to decline, which is a corrective fall. Though the stock slumped below ₹60 on Friday, but it found support at around 58 and bounced up sharply. The 50- and 200-day moving average poised at around 58 also cushioned the stock.
There is an increase in daily volume in the last two trading days. The daily price rate of change indicator has re-entered the positive territory implying buying interest. Both the daily and weekly relative strength indices are moving higher in the neural region towards the bullish zone. With the recent rally the stock appears to have resumed its medium-term uptrend. Short-term outlook is bullish for the stock. It can extend its up move and reach the price target of ₹64 and ₹65.5 in the short term. Buy with a stop-loss at ₹60.
(Note: The recommendations are based on technical analysis. There is a risk of loss in trading.)
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