Chart Check: BHEL sees breakout from falling trendline resistance on quarterly charts; time to buy?

The breakout has now opened room for the stock to head towards 100 levels in the next 3-6 months, suggest experts.

The stock rose more than 3% in a week and over 8% in a month. The momentum helped the stock to break out from Rs 76 levels. The stock closed at Rs 85.82 for the week ended 9th June 2023.

The heavy electrical equipment maker has also formed a flag pattern on the monthly charts which is a bullish continuation pattern.

The stock hit a 52-week high of Rs 91.45 on 5th December 2022, but it failed to hold on to the momentum. The stock found support above 200-DMA twice in February and then again in April 2023.

In terms of price action, the stock is trading well above most of the short- and long-term moving averages of 5,10,30,50,100 and 200-DMA on the daily charts, which is a positive sign for the bulls.

The Relative Strength Index (RSI) is at 62.5. RSI below 30 is considered oversold and above 70 is considered overbought, Trendlyne data showed.

ET CONTRIBUTORS

“After a decadal fall, BHEL stock took support at the previous base followed by upside movement. In its upside journey, the stock has breached the falling trend line and started to form a higher high and higher low sequence,” Kapil Shah, Technical Analyst, Emkay Global Financial Services and Trainer at FinLearn Academy, said.

“On the monthly chart, the stock has formed a flag pattern. It is a bullish continuation pattern. On the daily chart, the stock has breached the immediate support level,” he said.

From the MACD indicator perspective, MACD has a positive crossover around the zero line across the monthly, weekly, and daily charts. It is a very bullish continuation sign.

“On the weekly and daily chart, the stock is sailing above short to the long-term moving average. It explains the positive momentum in the stock. Based on the aforementioned rationale, BHEL stock is looking positive in the medium term. With a stop loss of Rs 78, stock can see an upside move up to the Rs 108 level,” recommends Shah.

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