SAIL Stocks Rallied 35%; Trend reversal Suggested!

29 May 2023
2 mins read
On Monday, Nifty opened with a huge gap-up and traded in a range while traders' favourite, Nifty Bank made a new lifetime high.
SAIL Stocks Rallied 35%; Trend reversal Suggested!

In such a strong bullish trading session, Nifty Metal witnessed strong buying activity as it crossed previous multiple swing highs and one stock from the same sector showed decent strength and is ready to register a breakout of the Trend Reversal pattern weekly charts. 

The stock is Steel Authority of India Limited (SAIL), which is one of the largest steel-making companies in India and one of the Maharatnas of the country’s Central Public Sector Enterprises. SAIL produces iron and steel at five integrated plants and three special steel plants, located principally in the eastern and central regions of India and situated close to domestic sources of raw materials. SAIL manufactures and sells a broad range of steel products including hot rolled coils, hot rolled plates, cold rolled coils, pipes, and electrical sheets, and long products such as thermo mechanical bars and wire rods. The firm operates through the following segments: BSP, DSP, RSP, BSL, ISP, ASP, SSP, VISL, and Others. The company was founded on January 19, 1954, and is headquartered in New Delhi, India.

Technically on weekly charts, the stock exactly bounced from the retracement support of the golden Fibonacci ratio of 61.8% of its previous rally in the mid-week of June 2022. From this low, it rallied nearly 35% and started trading in a range. This action formed a trend reversal price pattern-like formation named – “Inverted head and shoulder”. If we draw the trendline from the highs of the second week of April, 202 (Rs 112.35) and the mid-week of January 2023 (Rs 93.90), we’ll get the neckline of this pattern. 

Currently, the stock is consolidating in a range from the high of January 2023 which can be probably the right shoulder of the pattern. Any close above the neckline (Rs 87) will confirm the breakout. Considering all these levels, the minimum possible target of this pattern will be around Rs 110, which is more than 30% higher than the breakout level. Thus, it can be added to the long-term investors’ watchlist.