Technical Bits: Mahamaya Steel sees rounding bottom breakout

The stock of Mahamaya Steel Industries Limited has given breakout of Rounding Bottom pattern’s neckline on a weekly scale. The breakout was supported by justifiable volumes. Additionally, the stock formed a sizeable bullish candle on breakout week, which adds strength to the breakout.

The Rounding Bottom pattern may form at the end of an extended downtrend and often indicate a reversal in the long-term price movement. As the stock is trending lower the rate of the decline will begin to slow down. This is followed by a range pattern which ultimately shifts into a slow gradual increase. This rise ultimately leads to a bullish move.

The major trend of the stock is bullish as it is trading above its weekly pivot and above its long-short term moving averages, i.e. 20-day, 50-day, 100-day and 200-day EMAs and these moving averages are exactly in an ascending order, which suggests that the trend is strong. From a momentum oscillator perspective, the 14-period weekly RSI is currently quoting 73.17 and it is in the super bullish zone. The fast stochastic is also trading above its slow stochastic line. Moreover, the other volume-based indicators like OBV and Money Flow index are also very strong.

Going ahead, the stock has immediate support in the zone of Rs. 190-185 as short-term 13-day EMA and 20-day EMA is placed in that region, while the major support is placed in the zone of Rs. 170-165 as it is the confluence of short term 50-day EMA and upward sloping trendline support. On the higher side, the major resistance is placed in the zone of Rs. 235-240 level.

On Friday, the stock of Mahamaya Steel closed at Rs. 211.95 per share, surging 3.26 per cent. The stock opened at Rs. 205 per share and hit an intraday high of Rs. 212.85 and a low of Rs. 202.55 per share on BSE.