KPIT Technologies has fallen sharp in the recent months owing to disappointing earnings. The fall has been arrested right at key support zone and the recent price action suggests that buyers are active in the stock. Have a look at the monthly chart of KPIT Technologies featured below.
The recent fall has been arrested right at the key balance line highlighted in the chart above. Also note the pick up in volume as price approached this line, suggesting buyers were eager to step-in and buy the stock. If we drill down to the weekly chart, it is apparent that the stock has managed to edge above the prior swing high at Rs.116.1, which is an early sign of a change-in-behavior or trend-reversal if you will.
The stock has a resistance at Rs.142 in the monthly chart, and that is the target for someone wanting to buy the stock.
Let’s take a closer look at the recent price action by switching to the daily time frame.
It is apparent that the price reversed from the first gap zone on July 23. Notice the selling tail on that day and candlestick followers would probably call it a “gravestone doji”. The price has since dribbled lower to the support at Rs.99-101 range and there was a nice green candle on Friday, accompanied by a pick-up in trading volumes as well.
I expect the price to rally to the monthly resistance at Rs.140-142 zone. A breakout past the July 23 high of Rs.120.80 would reinforce the bullish view. A breakout and a subsequent retest of Rs.120.80-ish level would be a nice entry for those who are conservative. The aggressive trader can consider long positions at the current levels and on declines with a stop loss at Rs.99 and target of Rs.141.
Before I wind up the post, I wanted to share a Point & Figure chart generated using the “Trade Point” developed by www.definedge.com.The target based on the “vertical-count” works out to Rs.138, which is not too far off from the monthly resistance of Rs.142.
“Trade Point” is a wonderful piece of software, especially for those interested in Point & Figure. Before you entertain other ideas, let me set the record straight that I have NO COMMERCIAL ARRANGEMENT with DefineEdge. I liked the software and hence wanted to mention it here.
Disclamer: I am not a Sebi Registered Analyst. Please consult your personal advisor before taking any trading or investment decision based off the contents of this site. I DO NOT own shares in KPIT Technologies, but intend buying it next week.