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Investors with a short-term perspective can buy D-Link (India). After a medium-term downtrend from the January high of ₹153, the stock found support at a significant long-term base of ₹80 in late March. Triggered by positive divergence displayed in the daily relative strength index (RSI) and price rate of change indicator, the stock did a volte-face in early April. Following a sharp rally, the stock formed a flag pattern recently which is a bullish continuation pattern.
On Wednesday, the stock broke out of this pattern by gaining 5 per cent with above-average volume. With this rally, the stock appears to have resumed its short-term uptrend. The stock is now hovering well above its 21- and 50-day moving averages. The daily RSI has re-entered the bullish zone, while the weekly RSI continues to move higher in the neutral region.
Moreover, the daily price rate of change indicator is featuring in the positive territory. It can continue to trend upwards for the price targets of ₹116.5 and ₹119. Traders can buy the stock with stop-loss at ₹109.5.
(Note: The recommendations are based on technical analysis. There is a risk of loss in trading.)
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