Indices witnessed selling pressure from Thursday’s high and today also they are trading with volatile moves. Somehow, they recovered more than 80 points sharply from day’s low. The Capital Goods sector outperformed the benchmark index and one stock from the same sector is now near to its multi year technical breakout level.
The stock is Eimco Elecon (India) Ltd engaged in the business of Manufacturing and Marketing Equipment for Underground and Opencast mines. Its products include side dump loader, load haul dumper, coal hauler, universal drill machine, low profile dump truck, rocker shovel loader, articulated wheel loader and chair lift man riding system. The company was founded on July 31, 1974 and is headquartered in Vallabh Vidyanagar, India.
On monthly charts, the stock made a high of Rs 749 in January 2008 and from there it started a correction in which it retraced more than 78% of its previous rally and made a low of Rs 101 in August 2013. From this low it rallied almost 590% to make a high of Rs 695 in July 2015. There it again lost the momentum and started consolidation in big range by retracing 78% of its previous move which ended up in March 2020. Now it is trading just below the last swing high at Rs 638 and closing above Rs 695 will confirm the breakout of this multiyear continuation price pattern.
On daily charts, it registered a breakout up flag price pattern with strong volumes on April 24, 2023. After such a strong breakout, stock is trading in an ascending channel pattern from the last 10 days. Upper range of this channel is Rs 658 which is also today’s high. Any closing above this level will confirm the breakout of the ascending channel pattern. Volume cluster suggests strong hands are taking interest in this stock at current levels. All short term and long-term key moving averages along with 14-day period RSI (72) placed in the super bullish zone indicates strong momentum. The measured move target suggests that the stock has a potential to rise a minimum 25% after the breakout.
After considering all these factors, long term investors and breakout traders can add this stock to their watchlist.
Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations.