Chart Check: After hitting record high this month, Ashok Leyland displays strength in weak market

Ashok Leyland, part of the commercial vehicle space, hit a fresh record high earlier in August 2023 but witnessed some profit taking but chart structure suggests that bulls are here to stay.

Short-term traders can look to buy the stock for a possible target above Rs 200 in the next 3-4 weeks, suggest experts.

The commercial vehicle maker hit a record high of Rs 191 on 11th August 2023 but witnessed some profit-taking on Monday, 14th August.

The stock has been making higher highs and higher low formation for the past 5 months. The stock has rallied more than 11% in a month compared to around 1% drop seen in the Nifty50 in the same period. It has rallied more than 20% in the last 3 months.

The stock has created a strong base above Rs 130 levels and is now trading around the breakout zone on the weekly charts.

It moved in a range where for about 3 weeks Rs 184-186 acted as a strong resistance while support was placed above Rs 170.

The stock witnessed some profit-taking on Monday, 14 August 2023 from record highs but is still trading above the neckline of the breakout placed around Rs 184, suggest experts.

The daily Relative Strength Index (RSI) is at 70.1. RSI above 70 is considered overbought. This implies that the stock may show pullback.

In terms of price action, the stock is trading well above most of the short- and long-term moving averages on the daily charts which is a positive sign for the bulls.

“Ashok Leyland stock is in an overall uptrend and forming higher highs – higher lows from the past five months and formed a strong bullish candle,” Arpit Beriwal, Analyst, Equity Derivatives & Technicals, MOFSL, said.

“On the weekly scale, it is on the verge of a consolidation breakout after three weeks above Rs 184 levels and holding well above the same. On a daily scale as well, the structure of higher lows is intact from the past few sessions and holding strong in spite of market swings,” he said.

It is respecting its short-term moving average and the momentum oscillator (RSI) is above 70 zones which suggest overall strength in the stock.

“We recommend traders to buy the stock with stop loss below Rs 180 levels on a closing basis for an upside target towards Rs 205 zones,” recommends Beriwal.

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