Cement Stock: Chart Check: This Cement player gave a break above the “falling wedge” pattern; time to buy?

The ACC, part of the cement industry, has fallen more than 16% from its November 2021 highs, but a breakout of a “falling wedge” pattern on the weekly charts suggests that the bulls could take over at least in the short term. outperformed the benchmark on a weekly and monthly basis and gave a break above the “falling wedge” pattern, suggesting further upside. Experts see a target of Rs 2,400 which earlier proved to be a strong resistance level.

The stock with a market capitalization of over Rs 40,000 crore as of July 1, 2022, hit a 52-week high of Rs 2,587 on November 15, 2021. It closed at Rs 2,167 on July 1, 2022.

The ACC on the daily chart bottomed around Rs 1,900 in March 2022 and then rebounded strongly, but failed to clear the resistance placed around Rs 2,400.

The stock is still trading below the crucial 50 and 200-DMA on the daily charts, suggesting that the long-term trend remains bearish. But a close above Rs 2,185 or 50-DMA could give bulls momentum.

Also on the weekly charts, the stock is trading below the 50-WMA, but above the 200-WMA. The stock rose more than 3% in a week and fell just over 1% in a month, compared to a drop of more than 4% seen in the Nifty during the same period.

The ACC recorded a breakout of the “falling wedge” pattern on the weekly time frame, which is a bullish sign. The corners are triangle patterns pointing up or down. A triangle pattern that points downward, i.e. a falling wedge, is called a bullish wedge. Read also

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“On the weekly charts, we can notice that prices have rebounded from the 38.2% price retracement level before the advance, the level of Rs 895 (March 2020) up to Rs 2,589 (November 2021) . We can also observe a change in polarity by prices around the Rs 1,900 levels,” said Vidnyan Sawant, AVP – Technical Research, GEPL Capital.

“Prices gave an upside breakout from the ‘descending wedge’ pattern on the weekly time frame. We have seen strong volume participation with each rise in the stock, indicating strength in the positive move,” he said.

The RSI indicator on the weekly has formed a higher low, indicating bullish momentum.

“Based on the price action and technical parameters, we expect the stock to move towards the Rs 2,400 levels. The Rs 2,050 level would act as major support for the downside meter” , recommends Sawant.

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

Karen J. Nelson