Adani Enterprises gives consolidation breakout

After registering a high of Rs 1,717.20, the stock of Adani Enterprises Limited has witnessed a correction. The stock witnessed almost 30 per cent correction in just two weeks from the high of Rs 1,717.20. The correction is halted near the 38.2 per cent Fibonacci retracement level of its prior upward move and coincides with the 13-week EMA level.     

The stock has formed a strong base near the 13-week EMA as well as the 20-week EMA level for almost 53 trading sessions. However, on Tuesday, it gave a breakout of 53-day consolidation on the daily chart. This breakout was confirmed by the above 50-day average volume, indicating strong buying interest by the market participants.    

Additionally, the stock has formed a sizeable bullish candle on the breakout day, which adds strength to the breakout. Further, the stock also managed to close above the upper Bollinger band on the daily chart and started band walk, which is a bullish sign.    

One interesting observation on the leading indicator RSI is the recent throwback, which began from the high of Rs 1,717.20 to the low of Rs 1,201.20 while the weekly RSI has never breached its 60 mark. This indicates that the stock is in a super bullish range as per the RSI range shift rule. Currently, the weekly RSI has given a positive crossover and the daily RSI surged above its prior swing high, which is a bullish sign.    

On the daily timeframe, ADX is below the level of 10, which suggests that the trend is yet to be developed. However, the directional indicators continue in the ‘buy’ mode as +DI continues above the –DI. The volume-based indicator i.e. on-balance volume (OBV) is in the rising mode since the last five trading sessions.    

Going ahead, the zone of Rs 1,482-Rs 1,468 is likely to act as short-term support as it is the confluence of 13-day EMA as well as the 20-day EMA level. While on the upside, the prior swing all-time high of Rs 1,717.20 is likely to act as crucial resistance for the stock.