Technical Tip: Way2wealth recommend an upside price target on Tata Communications
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- Looking at the weekly chart, stock has seen tremendous rally from the bottom of around 322 (March 04, 2016) and rallied till 784 (March 17, 2017).
- Subsequently, the bullish momentum got cooled off and stock gradually corrected till 700.The said level coincides with the multiples supports. First, the daily 89-EMA, 38.2% retracement of its entire move from the bottom of 595.25 (December 30, 2016) to the top of 784(March 17, 2017).
- If we meticulously look at the weekly chart, we are seeing a formation of ‘Bearish Divergence’ which was followed by ‘Positive Reversal’. The said pattern occurred near 60 level of RSI.
- The previous weekly swing high of 688 formed on October 30, 2016; has turned its role post the breakout and should act as a strong support (change of polarity rule).
- On a daily chart, RSI (14) came near 40 levels and showed sign of reversal.
- Considering the above technical patterns, we are expecting stock to resume its primary trend hence we advise traders to buy this stock at current level of 714 with an upside price target of 850. Strict stop loss should be placed at 659 below which our bullish view will be negated.
- Buy TATACOMM at 714, Target 850 & SL 659.
- Return to risk ratio: 1:2.47.
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