capital goods inventory: Chart Check: 30% in one month! This capital goods stock just broke out of the double dip pattern

APL Apollo Tubes, part of the capital goods space, rose more than 30% in a month, helping the stock hit a new high last week, and experts believe the momentum should extend towards Rs 1,500.

The share price rose from Rs 859 recorded on July 12 to Rs 1,119 on August 12, which translates into a rise of more than 30% in one month.

The strong price action helped the stock break out of the double dip pattern resistance line on the weekly charts, signaling strength.



The neckline of the double bottom pattern was placed below the Rs 1,100 levels. The stock closed with gains of almost 9% in one week.

The double bottom forms at the bottom and signals the end of a falling market. The pattern is made up of two light backgrounds separated by a top.

Confirmation occurs when the price crosses the confirmation line. Read also

Short-term traders can look to buy the stock now or down for a possible target of Rs 1,500 over the next 1-2 months, experts suggest.

The relative strength index (RSI) is at 75.3. An RSI above 70 is considered overbought. This implies that the stock may show a pullback. MACD is above its center and its signal line, it is a bullish indicator.

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On the price front, the stock primarily trades on the crucial short-term and long-term moving averages such as 5, 10, 20, 30, 50, 100, and 200-DMA, which is a positive sign for traders. bullish.

On the weekly timeframe, prices were in a strong upward trend from May 2020, prices after September 2021 saw a break in the trend. Prices are currently trading at their all-time high, indicating that prices are experiencing strong momentum.

“Last week, prices gave a breakout from a double bottom pattern, which indicates that prices have started a new upward trend,” said Vidnyan Sawant, AVP – Technical Research, GEPL Capital.

On the daily charts, we can observe that the volumes increase with the prices which confirms that the demand pushes the prices upwards.

The Bollinger Band on the daily time frame has started to expand indicating that price volatility is rising for an upward move.

“The RSI on the weekly timeframe gave a break which again indicates that the prices have strong momentum. Going forward, we expect the prices to rise to the level of Rs 1,500, we recommend a stop loss loss of Rs 1,000, strictly on a closing basis,” he said.

“Confirmation occurs when price breaks above the top (i.e. the confirmation line). Most of the rules associated with the double top formation also apply to the double bottom pattern,” Sawant recommends.

(Disclaimer: The recommendations, suggestions, views and opinions given by the experts belong to them. These do not represent the views of Economic Times.)

Karen J. Nelson