Technical Stock Pick: Multibagger in a year! Is Dixon Technologies in a new bull market?

Dixon Technologies Ltd, part of the consumer electric industry, has already rallied by about 150% in a year and the recent breakout from the ‘cup’ pattern has opened room for further upside.

Short to medium-term traders can look to buy the stock for a target above 7000-7600 levels, suggest experts.

The stock hit a record high of 6240 in October 2021, but it failed to hold on to the momentum. The stock witnessed a time wise and price-wise correction.

It found support above 2500 levels in January 2023 before bouncing back. The stock has been in a steady uptrend after reclaiming 50-DMA on the daily charts.

The stock rose from Rs 2722 recorded on 21st February 2023 to Rs 6734 as on 21st February 2024 which translates into an upside of 147% in a year.

The stock reclaimed October 2021 high in December 2023, resulting in forming a Cup pattern. The stock consolidated around the breakout zone for the past 2 months.It broke out from the resistance zone after retesting the 50-DMA on the daily charts. The stock closed at Rs 6728 on 21 February 2024.The stock rose more than 6% in a week and over 20% in the last 3 months. The momentum helped the stock to hit a fresh record high of Rs 6928 on 20th February 2024.

In terms of price action, the stock is trading well above most of the crucial short- and long-term moving averages such as 5,10,30,50,100 and 200-DMA on the daily charts.

The daily Relative Strength Index (RSI) is at 70.8. RSI above 70 is considered overbought. This implies that the stock may show a pullback.

The daily MACD is above its center and signal Line, this is a bullish indicator, Trendlyne data showed.

“Dixon Technologies stock recorded an all-time high breakout earlier this week after a corrective phase when it broke above the previous all-time high in December 2023,” Aditya Thukral, Founder & Analyst for AT Research & Risk Managers, said.

“The stock prices are rallying with strong momentum and the strength can be witnessed in the Relative Strength (RS) indicator which continues to remain above 0,” he said.

The price structure of higher highs and higher lows suggests an intact uptrend on short-term as well as long-term charts. The previous breakout and yesterday’s fresh all-time high breakouts are with rising volumes.

“An uptrend continuation is expected to happen in the stock prices where longs should have a stop loss below 6125 on the weekly closing basis which is the higher low of the current rally,” recommended Thukral.

The stock is well placed above all the major exponential moving averages viz. 50-day, 100-day, and 200-day and hasn’t even closed below its 50-day EMA since 24th July 2023 which currently reads at 6174.6.

“This might be the start of a new bull market in the stock after the breakout of Cup pattern during the first breakout and suggests very high price targets, but, conservatively, one can easily expect the levels of 7600 to be seen in the coming 4 to 6 weeks,” added Thukral.

Analyst Disclaimer: SEBI Registration No. INH000013794. The Research Analyst and its associates/relatives may from time to time, have a long or short position in the securities or derivatives thereof of companies discussed herein.

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

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