Chart Check: Breakout from double bottom pattern makes this two-wheeler maker an attractive buy; could hit record highs

Bajaj Auto, part of the 2-3 wheeler industry, which rallied over 5% in a week gave a breakout from a double bottom pattern on weekly charts which has opened doors for the stock to climb above Rs 4,000 level.

The two-wheeler stock hit a record high of Rs 4,130 on 1 September 2022, but it failed to hold on to the momentum. The stock took support near Rs 3,500 levels or near the 200-WMA on the weekly charts before bouncing back.

Short-term traders can look to buy the stock now or on dips for a possible target towards Rs 4,300 level in the next 3-4 weeks, suggest experts.

The stock consolidated around Rs 3,500 level on the weekly charts twice creating a double bottom pattern. The stock recorded a breakout above the neckline of the pattern placed at Rs 3,800 last week.

In terms of price action, the stock price is trading above most of the short and long-term moving averages such as 5,10,30,50,100, and 200-DMA which is a positive sign for the bulls.

The relative strength index (RSI) is at 64.8. RSI below 30 is considered oversold and above 70 is considered overbought, Trendlyne data showed. MACD is above its center and signal line, this is a bullish indicator.



Bajaj Auto has witnessed a change in the polarity within its prices, which points towards the rising bullish sentiments around the level of Rs 3,400.

“The stock post September 2022 corrected without getting into lower low, lower high formation. The stock in the latest week has given a breakout on the double bottom pattern which indicates the beginning of the trend to the upside,” Omkar Patil, Technical Research Associate at GEPL Capital, said.

“The breakout of the double bottom pattern on the stock of Bajaj Auto is considered to be a confirmed signal of an upward trend as it is supported by higher trading volume and a gap on the daily chart,” he said.

“Furthermore, on the weekly chart, the RSI, a momentum indicator, has also broken out at the level of 60, indicating strong bullish momentum in the trend of the stock of Bajaj Auto,” highlights Patil.

“Going ahead, we expect the prices to move higher till Rs 4,353 where the stop loss must be Rs 3,818 on the closing basis,” he recommends.

(Disclaimer: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of Economic Times)