Technical Stock Pick: This multibagger power stock breaks out from the 60-day range; time to buy?

The stock has already given multiabgger returns in the last one year. However, the momentum slowed down in 2024.

The stock moved in a range from December 2023-March 2024 on the daily charts. The stock moved in a narrow range where levels around 560 acted as a strong resistance while on the downside 480-500 levels acted as a strong support.

The stock closed at Rs 568 on a closing basis which led to a brief breakout in the stock price on a closing basis. However, for the trend to sustain, the stock must close above 589 which is the record high touched on 6th December 2023.

“The Adani Power was one of the best outperformers from Feb 2023 to Dec 2023. It has generated wealth over 340% in less than one year, the stock price went up from 130 odd to ATH around 590 in Dec 2023,” Kiran Jani CIRA, Head of Technical Research at Jainam Broking Limited, said.

“Post registering a 52-week high of around 590, stock prices started forming a rectangle pattern or we can say time correction started,” he said.

In terms of price action, the stock is well above most of the crucial short- and long-term moving averages of 5,10,30,50,100 and 200-DMA on the daily charts.

The daily Relative Strength Index (RSI) is at 54.7. RSI below 30 is oversold and above 70 is considered overbought, Trendlyne data showed. The daily MACD is above its center and signal Line, this is a bullish indicator.

“Since Dec 2023 we are seeing prices have started moving into a very narrow range and registered 15% price correction in the last 3 months. At the current juncture, we can see a bullish price pattern breakout with bullish divergence visible on chart,” highlighted Jani.

The price has formed a rectangular pattern. And within that, we are seeing trading above its 50 SMA and 200 SMA after a long time. Looking at the relative strength index (RSI-14) shows multiple bullish divergences.

“Considering the current chart pattern, we are expecting prices to touch 690 if prices hold 510 levels,” recommended Jani.

(Disclaimer: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of the Economic Times)