Chart Check: This consumer durable stock has given a breakout from double bottom pattern; time to buy?

Bajaj Electrical, part of the consumer durable industry, has fallen by over 25 per cent from September 2021 highs but technical chart pattern suggests that there could be a bounce back from current levels.

Short-term traders can look to buy the stock now or on dips for a possible target of Rs 1,400-1,550 in the next 3-4 weeks, suggest experts.

The stock hit a 52-week high of Rs 1,588 on 17 September 2021 but failed to hold on to the momentum. It closed at Rs 1,177 on 15 July 2022 which translates into a downside of more than 25 per cent.

However, recent price action suggests that bulls could be making a comeback. The stock rose over 5 per cent in a week, and more than 25 per cent in a month, Trendlyne data showed.

The stock closed above its long-term moving average placed at 200-DMA last week which suggests a continuation of the momentum.

It also gave a breakout above the neckline of a double bottom pattern on the weekly charts last week. The neckline of the said pattern was placed around Rs 1,100 levels.


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

The Relative Strength Index (RSI) is placed at 74.1. RSI above 70 is considered overbought. This implies that stock may show pullback, Trendlyne data showed. MACD is above its center and signal line, this is a bullish indicator.

On the weekly charts of Bajaj Electricals, we can spot that the prices gave a breakout from the descending triangle pattern 3 weeks back.

The prices have shown a bounce from Rs 900 level which is a multiple touch point level and also 50 per cent of Fibonacci retracement from 260 level (March 2020) to Rs 1,588 level (September 2021).

“On the weekly timeframe prices have given a breakout from double bottom price pattern around the level of Rs 900. The double bottom pattern is a bullish reversal pattern. The breakout was followed by higher volumes, which shows strong participation in the breakout,” Vidnyan Sawant, AVP - Technical Research, GEPL Capital, said.

“The RSI plotted on the weekly and daily timeframe is rising and sustained above 60 mark, which tells us that the stock has a strong positive momentum,” he said.

Based on the price action and technical parameters, Sawant expects the stock to move higher towards the 1400 level in the next 3-4 weeks, followed by Rs 1,550 levels. We recommend a stop loss of Rs 1,000, strictly on a closing basis.

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