Technical Analysis - Suzlon Energy

SUZLON expected to be Bullish – might touch Rs. 70

Written by iBlogger on May 5, 2009 in Technical Analysis | Comments Off

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Suzlon Energy

Symbol: SUZLON

Suggestion: BUY, Stop loss at Rs. 65; Target – Rs. 70

Open	66.00
High	67.75
Low	64.90
Last Price	65.90

Figure 1: Price Movement Bar Chart [Suzlon

Figure 1 shows the price movement bar chart for Suzlon Energy for the last 2 months. The blue lines in the figure are the trend lines. These trend lines have been acting as the support and resistance for the price chart for somewhere around 2 weeks and have been tested 2-3 times. As can be seen from the figure, the price chart is in between the trend lines as of now and is moving towards the resistance line. This is the best time to buy the stock of Suzlon, as there is a high probability attached that the price will further test this pattern by touching the resistance line.

Further, the SMA(20) line is also coming closer to the price line but is still below the price line and thus the bullish phase is on. Only after the SMA(20) line crosses the price line, the stock will enter the Bearish phase.

Figure 2: ADX chart [Suzlon]

The ADX chart in figure 2 shows a value of 37.79, which clearly shows that the stock is currently in the trending phase. As the stock is in the trending phase, the trend follower tools can be used.

Figure 3: MACD [Suzlon]

Using the most common trend follower tool, MACD (Moving Average Convergence Divergence) as shown in figure 3, although the difference between the EMA(9) and MACD is very small but the EMA(9) is still below the MACD line. By projecting the EMA(9) line for the future sessions, it is noticed that it will stay below the MACD line for at least some sessions, therefore supporting Bulls in taking the stock price further up.

Thus, the Bulls are expected to pull up the prices of Suzlon energy in coming 3-4 sessions. In order to grab this opportunity, the investor is suggested to buy the stock and keep a stop loss at Rs. 65 (the lowest for the day). The investor can sell the stock once it reaches a price of Rs. 70 because after that the price will touch the resistance line and thus will start falling.

Glossary:

SMA – Simple Moving Average

EMA – Exponential Moving Average

MACD – Moving Average Convergence Divergence

ADX – Average Directional Index