Technical Analysis

Sizzling stocks - Idea Cellular (Rs 85.7)

Yoganand D. | Updated on July 07, 2012 Published on July 07, 2012

After consistently knocking at its significant resistance at Rs 100 between August 2011 and April 2012, the stock of Idea Cellular witnessed a sharp fall in late April. However, the stock found support at Rs 73 in late May and again in late June this year.

The stock’s long-term uptrend line also provided support around Rs 73. Thereafter, the stock changed direction, triggered by positive divergence in the daily moving average convergence divergence indicator. It jumped 12.8 per cent with good volumes last week.

But the stock is facing resistance at Rs 90 which is also a key medium-term trend deciding level.

A strong rally above this level will alter the medium-term trend upwards and take the stock higher to Rs 100 in the ensuing weeks.

Only a decisive jump beyond Rs 100 will signal that the stock has resumed its long-term uptrend and can then rally to Rs 120 and Rs 130.

The inability to surpass Rs 100 will confine the stock hovering between Rs 80 and Rs 100. On the downside, a decline below Rs 80 will pull the stock down to Rs 73 and Rs 75 range.

Chambal Fertilisers and Chemicals (Rs 80.6)

Ever since peaking out in September 2011 at a high of Rs 118, the Chambal Fertilisers stock has been on an intermediate-term downtrend.

Nevertheless, its long-term support in the zone between Rs 67 and Rs 70 halted the stock’s decline in early May and June this year.

Last week, the stock gained bullish momentum and climbed 10 per cent backed by good volumes. Short-term trend is up for the stock from its 52-week low registered this May at Rs 66.

Going forward, the stock will encounter resistance at Rs 85. An emphatic jump can push the stock higher to Rs 93, which is the significant medium-term resistance.

However, failure to rally above Rs 85 will pull the stock down to Rs 75 or even to Rs 70 in the short-term.

Strong weekly close above Rs 100 is required to reverse the downtrend and lift the stock higher to Rs 118 and to a new peak in the forthcoming months.

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