Dharmesh ShahICICI Direct.com
Tata Steel after a strong up move during CY16-17 from Rs 202 to Rs 755 levels, has entered a corrective consolidation in the last 10 months which has helped it to work off the overbought conditions on momentum oscillator and created an attractive entry opportunity.
The stock during the entire corrective trend has formed a consolidation base around the Rs 540 levels as it is the confluence of:
38.2 percent retracement of the entire C.Y 2016-2017 up move (Rs 202-755)
The neckline of the previous rounding breakout area of August 2017. The trend line support joining the low of May 2017 (Rs 408) and July 2018 (Rs 493)
The stock has already taken 10 months to retrace less than 80 percent of the previous nine months up move from Rs 408 to Rs 755. A slower retracement of the last falling segment signals strength and positive price structure.
Based on the above technical observation we expect the stock to head higher from hereon towards Rs 655 levels in the medium term as it is the confluence of the 61.8 percent retracement of the previous decline (Rs 755-493) and high of September 2018.
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