Technical Analysis

Chart Focus: Vedanta (Buy)

Yoganand D | Updated on April 01, 2019 Published on April 01, 2019

Investors with a medium-term horizon can buy the stock of Vedanta (₹183.7) at current levels. On Friday, the stock advanced 3.2 per cent, accompanied by above-average volume, decisively breaching a key resistance at ₹180. Moreover, the stock has conclusively surpassed the 21- and 50-day moving averages and trades well above them.

The stock has gained 5.6 per cent with good volume over the past one week on the back of buying interest. It had encountered a key resistance in the band between ₹340 and ₹350 in January and February 2018. Since then, the stock has been in an intermediate-term downtrend. But it found support at ₹145 this February and changed direction. Since then, the stock has been in a nascent short-term uptrend.

 

The daily relative strength index has entered the bullish zone from the neutral region and the weekly RSI features in the neutral region. Besides, the daily price rate of change indicator hovers in the positive terrain, implying buying interest. The recent rally of the stock has decisively breached the medium-term downtrend line.

The medium-term outlook is bullish for the stock of Vedanta. It has the potential to extend the rally and test immediate resistance at ₹200. A strong break above this level can take the stock up to ₹205 and ₹215 in the ensuing weeks. Traders can buy the stock with a stop-loss at ₹169.

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