smallcap shares: Chart Check: 100% in 6 months! Multi-year trendline breakout puts small-cap stock on buyers’ radar
After the strong rally, the stock is trading at overbought levels which could lead to some profit taking, but traders may look to buy the stock lower for a possible target of Rs 1,300, they say.
RPG Life, which is part of the S&P BSE Smallcap Index, reached a record high of Rs 1,012 on November 15, 2022. It was up almost 15% in one week and more than 25% in one month. On a 3-month basis, the stock is up nearly 50%, according to Trendlyne data.
The stock recently experienced a break of a multi-month trendline connecting the highs from January 2018 to October 2022 on the monthly charts, which bodes well for the bulls.
The relative strength index (RSI) is at 71.1. 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.
The stock has been hitting higher highs and lows on the monthly charts since May 2022. In terms of price action, it is trading above most of the crucial short-term and long-term moving averages, which is a positive sign for bulls.
The RPG share price started its rise from Rs 45 recorded in February 2014. The share reached a high of Rs 607 in January 2018 and continuously took support from the averages in its uptrend.
“During Covid, the stock corrected and bottomed at Rs 146 (Mar 2020) below averages. Thereafter, value buying followed and the stock reached a high of Rs 752 (September 2021)”, Bharat Gala, President – Technical Research,
“Recently, the stock gave a breakout and reached a high of Rs 995 above previous all-time highs, accompanied by volumes. A break above Trendline connecting January 2018 and October 22 has occurred,” he said.
“A positive weekly candle formation above the averages is seen in the stock suggesting buying interest. The MACD, KST & ADX indicator suggests a possible firm uptrend,” Gala pointed out.
“Possible targets are Rs 1,300-1,500. If the stock price corrects lower, buy levels are (Rs 928-886)-Rs 853-(Rs 820-800). The stop loss to observe in the trade is Rs 725,” he recommends.
(Disclaimer: The recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)