The metal index recently witnessed its deepest cut of 14% since February 2023, during which it significantly surged by 95%. The index retraced below the 100 DMA and reclaimed the average line in a brief period, indicating potential signs of a shakeout. With this, the average line now acts as immediate support, and we anticipate a continuance of the pullback rally in the metal index.
The price action of VEDL has shifted into a broader sideways range after climbing over 100% from the lows in March 2024.
This indicates sustained interest from astute investors, thereby restraining potential downturns. The 400-405 zone has proven to be a robust demand area, with the price action experiencing a technical rebound after a retest.
In the current instance, the price action has formed a mini double-bottom pattern within the consolidation range, indicating a trend reversal.
VEDL has exhibited improving relative strength compared to the 50-index and has shown reduced volatility over the last 50 trading sessions, signalling a lower probability of sudden large downturn movements, which is a positive indicator.
The RSI across daily and higher timeframes are trading well above their medians, indicating garnering of further thrust in the price momentum.
With 50 daily MA acting as immediate support, we recommend buying VEDL with a target price of 535 and maintaining a stop loss at 436.