Recently, Allcargo Logistics has formed a bullish Bat pattern, which is a harmonic chart pattern known for indicating potential reversals. This pattern emerged after the stock created a triple bottom structure near its historical low of Rs 61, which is a strong sign of price support.
The triple bottom pattern typically signifies that the stock has tested a key support level multiple times, failing to break below it, which suggests that the downward momentum is weakening. Additionally, a bullish divergence was observed just before the stock reversed from the 61 level, where the price made a lower low, but the momentum indicator (such as the RSI ) showed a higher low.
This divergence is a classic signal that the downtrend might be losing steam, hinting at a potential upward reversal. Based on these technical indicators, it was advised to buy the stock on dips in the range of Rs 66-70, with an upside target of Rs 80. To manage risk, a stop-loss is suggested at Rs 62, based on a daily closing price, which would limit potential losses if the stock breaks below this key support level.
Adani Power
In June 2024, Adani Power reached a significant peak of Rs 895, representing a high point in its trading performance. However, since reaching this peak, the stock has undergone a substantial decline, losing approximately 275 points, which translates to a sharp 31 per cent drop in price. This steep decline has brought the stock down to a crucial support level, where it has formed a triple bottom pattern within the Rs 630-Rs 650 range. The triple bottom pattern, especially when occurring at a previous demand zone, is often viewed as a bullish signal, indicating that the stock has found strong support at these levels and may be on the verge of a reversal.
These technical signals together make Adani Power an attractive buy candidate at current levels. Based on this analysis, entering a long position within the Rs 660-Rs 670 price range is recommended, with an upside target of Rs 750. To manage risk effectively, it is advised to place a stop-loss at Rs 625 on a daily closing basis to protect against any further downside potential.
Asian Granito
This pattern is typically considered a reliable indicator of a reversal from a downtrend to an uptrend. The breakout and pattern formation are supported by increased trading volumes, suggesting strong buying interest, and the positive alignment of momentum oscillators, which reflect increasing bullish momentum.
Given these positive technical indicators, traders are advised to buy Asain Granito within the price range of Rs 88 to Rs 87. To manage risk, a stop loss should be placed at Rs 80 on a closing basis. The anticipated price targets for this trade are Rs 101.
(Disclaimer: Jigar S Patel is a senior manager of equity research at Anand Rathi. Views expressed are his own.)
First Published: Sep 03 2024 | 6:22 AM IST
