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    Chart Check: 50% return in 3 months! This smallcap hits record high in Nov; should you buy or book profits?

    Synopsis

    The Relative Strength Index (RSI) is at 68.1. RSI below 30 is considered oversold and above 70 is considered overbought, Trendlyne data showed. MACD is above its center and signal Line, which is a bullish indicator.

    Chart Check: 50% return in 3 months! This smallcap hits record high in Nov; should you buy or book profits?Shutterstock.com
    Action Construction Equipment, part of the S&P BSE Smallcap index, hit a fresh record high in November last week and chart patterns suggest that the momentum is likely to continue, suggest experts.

    The stock from the construction vehicle space hit a fresh record high of Rs 330 on 4 November. The stock recently retested the neckline of the rounding bottom breakout seen in August on weekly charts.

    It has rallied nearly 50% in the last 3 months to hit a fresh record high in November. The momentum could take the stock above Rs 400 levels in the next 1-2 months, suggest experts. Hence, traders can look at buying the dip.

    The Supertrend indicator also triggered a buy signal in August. Post the breakout, the stock underwent some consolidation and retested Rs 291 levels – the neckline of the rounding bottom breakout. The stock closed at Rs 327 on 4 November.

    On the price front, the stock price is trading above crucial short- and long-term moving averages which is a positive sign for the bulls. It is trading above 5,10,30,50,100 and 200-DMA.

    chart check ACE 04112022ET CONTRIBUTORS

    The Relative Strength Index (RSI) is at 68.1. RSI below 30 is considered oversold and above 70 is considered overbought, Trendlyne data showed. MACD is above its center and signal Line, which is a bullish indicator.

    “While looking at the border picture of ACE, we can spot that the stock is moving in a clear Higher High, Higher low formation,” Omkar Patil, Technical Research Associate at GEPL Capital, said.

    “The stock has shown a bounce on the upside while retesting the Neckline of the Rounding bottom pattern, which the stock had shown a breakout earlier in the last week of August. This suggests the continuation of the prior uptrend,” he said.

    He further added that Ratio charts versus Nifty50 show a good Bullish breakout which illustrates that the stock can outperform the current levels.

    Bollinger band on the daily timeframe has started to expand after a narrow range, indicating that the volatility has started to rise on the upside as the prices have closed above the upper band with higher volumes.

    “The prices have started to deviate from the 20-week EMA without retesting it, showing an acceleration in trend. Going ahead, we expect the prices to go higher till Rs 410, while the stop loss must be Rs 290 on a closing basis,” recommends Patil.

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



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