The stock of EID Parry India jumped 16 per cent last week, breaking a significant medium- term resistance at ₹172. This rally gives investors with a medium-term horizon an opportunity to buy the stock at current levels.
The stock had registered a 52-week as well a multi-year low at ₹135 in late July. It subsequently changed direction, triggered by positive divergence in the weekly moving average convergence divergence and the price rate of change indicators. Thereafter, the stock started to move sideways with an upward bias, forming an ascending triangle pattern. Generally, triangle patterns are continuation patterns, but in this case, it acts as a reversal pattern.
Last week, the stock broke out of the ascending trading pattern and met the pattern’s price target of ₹200. However, since the stock had changed direction from a medium-term perspective, it has further room to extend the uptrend.
Also, the stock has conclusively breached its 200-day moving average, and hovers well above it as well as the 50-day moving average, implying bullishness.
The daily relative strength index (RSI) features in the bullish zone and the weekly RSI has just entered the bullish zone from the neutral region. Further, the daily as well as the weekly price rate of change indicator feature in the positive territory, implying buying interest.
The medium-term outlook is bullish for EID Parry India. The stock can continue the medium-term uptrend and reach the price target of ₹220 with a pause at ₹205. Investors can buy with a stop-loss ₹178.