Gujarat Fertilizers and Chemicals meets the trend template of Mark Minervini
The stock of Gujarat State Fertilizers & Chemicals (GSFC) has zoomed over 6% on Friday accompanied by the highest single-day volume since October 28, 2021.
Interestingly, the stock with this strong up-move witnessed a breakout of ascending triangle pattern on the weekly time frame. The ascending triangle pattern is a bullish continuation pattern and is characterized by a rising lower trendline and a horizontal upper trendline that acts as a resistance. Furthermore, what’s striking is the fact that the breakout in the stock is supported by a robust volume of more than 7 times of 50-days average volume, indicating strong buying interest by market participants. The 50-days average volume was 22.36 lakh while in the Friday trading session volume was 150 lakh.
Currently, the stock is meeting the criteria of Mark Minervini's trend template. The current market price of the stock is above 10, 30 and the 40-week moving averages. Moreover, all these moving averages are in the desired sequence and all are trending up. It is also meeting Guppy Multiple Moving Average (GMMA) set up by Daryl Guppy. This structure indicates that the stock is in a clear uptrend.
The stock was seen outperforming the frontline. Also, it has relatively outshined Nifty 500 with a decent margin. The relative strength comparison with Nifty 50 and Nifty 500 marked a fresh high.
As the stock is trading near its all-time high, all the trend indicators are showing that the uptrend continues. Its Relative Strength Index (RSI) has reached its highest value in the last 14-weeks, which is a bullish sign. Also, it has managed to surge above the 60 mark. The weekly MACD has given a fresh buy signal and the MACD has turned positive. Directional indicators continue in the ‘buy’ mode as +DI continues above –DI.
Based on the above observations, we expect the stock to continue its upward movement and test levels of Rs 155, followed by Rs 170 level. On the downside, the level of Rs 119 is likely to act as strong support in the medium term.
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