Bajaj Electricals gives channel breakout

The stock of Bajaj Electricals Limited had formed a morning Doji star candlestick pattern as on the weekend of April 09, 2020, and thereafter, marked the sequence of higher tops & higher bottoms. From the low of Rs 260, which was registered in the month of April 2020, the stock has gained almost 332 per cent. After registering a high of Rs 1,124.55, the stock has slid into a period of consolidation. During this consolidation, the stock was trading in a downward sloping channel.     

On Friday, the stock has given a downward sloping channel breakout. This breakout is confirmed by a robust volume of more than three times of 30-day average volume. The 30-days average volume is 1.54 lakh while on Friday, it witnessed over five lakh volumes. This indicates a strong buying interest by the market participants.     

In addition, the stock has formed a sizeable bullish candle on the breakout day, which adds strength to the breakout. The bullish candle formation has come along with a rise in the daily range. The last 10 days’ average is 37.18 points whereas Friday’s trading range was almost 112 points.    

This upside breakout is also accompanied by a robust move on the chart of relative strength comparison with the benchmark indices, Nifty and Nifty 500.    

Currently, the stock is trading above its short and long-term moving averages. These moving averages are edging higher, which is a bullish sign. Among the momentum indicators, the RSI is in a bullish trajectory. On the daily chart, the RSI is marking higher tops & higher bottoms since the last 17 trading sessions. The weekly RSI is in a super bullish range. In the recent correction, the weekly RSI has never slipped below the 60 mark. Further, the daily and weekly MACD stays bullish as it stays above its zero lines and signal lines.     

Technically, all the factors are currently aligned in support of the bulls. Hence, we would advise the traders to be with a bullish bias. On the downside, the 8-day EMA level is likely to act as immediate support for the stock, which is currently placed at Rs 1,060 level. While on the upside, the level of Rs 1,260 will act as crucial resistance for the stock.