Inverted Head & Shoulder breakout
On the daily charts, Jindal Steel & Power has witnessed strong accumulation, resulting in a rounding bottom. In this course of action, the stock has also broken out of a complex inverted Head & Shoulder (H&S) pattern which is considered to be a bullish pattern. Jindal Steel has breached the precise neckline which is placed at Rs432. The projections on an inverted H&S suggest that the stock has potential to rally up to Rs540 in the medium term.
On the weekly chart, after hitting lows of Rs320 in mid September 2012, the scrip bounced back accompanied with a smart spike in trading volumes. In this process, the counter has gained momentum and has managed to break out from a symmetrical triangle, which also supports our bullish argument in the counter.
Breaching 200 DMA
Corroborating our positive view in the counter, the stock has closed above its critical moving average (200-DMA) placed at Rs440, indicating strength in the counter and an ideal risk-reward ratio to go long from current levels.
Given the above evidences, we recommend traders to BUY the stock at current levels for a potential first target of Rs540 and second target of Rs560. Traders are advised to keep a strict stop loss of Rs403.
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