The stock is in a bear grip. It has fallen over 40 per cent from its 52-week high of Rs 5,958 recorded on 4 January 2022. The stock closed at Rs 3421 on 22 July.
Bulls helped the IT services stock to climb above the 50-DMA placed at Rs 3286 on 20 July which also helped the stock to break above the neckline of an inverse head and shoulder pattern on the daily charts.
An inverse head & shoulder pattern is the mirror image of the head and shoulder pattern and is a bullish signal.
It is defined as three bottoms with the middle bottom (head – marked as H) significantly lower than the other two bottoms (left and right shoulders – marked as S).
The relative strength index (RSI) is 63.8. RSI below 30 is considered oversold and above 70 is considered overbought. MACD is above its center and signal line, this is a bullish indicator.
On the price front, the stock is trading above 5,10,20,30, and 50-DMA while it is trading below 100 and 200-DMA.
On the weekly charts of LTTS, we can spot prices that have shown a bounce back from the level of 61.8 per cent Fibonacci retracement of the prior advance from Rs 986 (March 2020) to Rs 5,955.50 (January 2022).
“On the daily timeframe, we witnessed a breakout from the inverse head and shoulder pattern on 20th July 2022, which is a bullish reversal pattern,” Vidnyan Sawant, AVP – Technical Research, GEPL Capital, said.
“The breakout was followed by strong volumes, which indicates bullish sentiment in the prices. Prices have also sustained above the 50-Day SMA which is a sign that prices are reversing on the upside from the prior downtrend,” he said.
RSI plotted on the daily time frame has shown a range shift with positive divergence being in sync with it, this tells us that the stock now has strong momentum in the prices for the upside.
Going ahead, Sawant expects the prices to move higher till the level of 4000. He recommends a stop loss of Rs 3,040, strictly on a closing basis.
(Disclaimer: Recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of Economic Times)