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Story in a chart: Long build-up seen in ITC, buy for a target of Rs 210

At the current juncture, the stock is comparatively light on positions and marginal long build-up is seen in the current bounce which is a positive sign for the counter.

April 06, 2020 / 01:09 PM IST
 
 
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Jay Purohit

ITC seems to be ready to take a u-turn after the fall in price halted around the reversal zone of a Bullish Butterfly pattern on the weekly chart and started rebounding in the last few days. The stock rose nearly 7 percent on April 3.

We are witnessing a double-bottom kind of formation on the daily chart. RSI oscillator started moving northward from the oversold territory on both daily and weekly scale, which is a sign of relief for the bulls.

The stock had a strong bear phase in the last one year and corrected by more than 50 percent. The fall was supported by the huge short formation in the futures segment.

The open interest has reached to highest ever level of 16.91 crore on March 6 but, we witnessed a good amount of unwinding in the stock in the later fortnight of the March series, indicating that traders gradually exited their short positions.

Close

At the current juncture, the stock is comparatively light on positions and marginal long build-up is seen in the current bounce which is a positive sign for the counter.

Looking at the overall chart structure and derivatives data, we are expecting a bounce in the stock towards Rs 210 levels in the coming weeks. Thus, any dip toward 173 shall be used as a buying opportunity with a stop-loss of Rs 160.

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(The author is a technical and derivatives analyst at Motilal Oswal Financial Services)

Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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