Technical Analysis

Ramco Systems (₹201.2): Buy

Yoganand D BL Research Bureau | Updated on May 30, 2019 Published on May 30, 2019

Investors with a short-term view can consider buying the stock of Ramco Systems at current levels, taking a contrarian stance. The stock has been in a long-term downtrend since encountering a key resistance at ₹570 in January 2018. Both medium and short-term trends are also down. However, the stock recorded a multi-year low at ₹187 this week and began to trend upward triggered by positive divergence in the daily relative strength index as well as price rate of change indicator.

On Wednesday, the stock gained 5.8 per cent accompanied by above average volume. This rally shows signs of trend reversal. The daily RSI has entered the neutral region from the bearish zone and the weekly RSI is recovering from the oversold territory.

The daily price rate of change indicator is on the brink of entering the positive terrain, an entry will imply buying interest. There has been an increase in daily volume over the past five trading sessions.

Traders with a contrarian view can consider buying the stock with a stop-loss at ₹197. It has the potential to trend upwards and reach the price targets of ₹210 and ₹214 in the upcoming trading sessions.

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

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