Won't You Pay Attention to This Metal Stock for Trading?

About the company:

Vedanta Ltd (NS:VDAN) is engaged in exploring, extracting, and processing minerals, metals, and oil & gas. The minerals and metals include zinc, lead, silver, copper, aluminum, iron ore, and oil & gas. The scrip is trading at a 15.7% discount to its 52-week high level. The 52-week high and 52-week low range is Rs 386 – Rs 91.2.

Technical observations:

One week time frame: (Chart 1)

On a weekly time frame, from the below chart, you should note that the stock has made a Rounding Bottom formation. We can see that the share broke an important resistance level of Rs 313 in the week of October 11, 2021. It reached a 52-week high level and has now pulled back close to Rs 313 support level. We anticipate the scrip to move higher from the current level supported by increased volumes. The Relative Strength Index (or RSI) has taken support at a level of 50 and has bounced back above 60. It indicates strength and positive momentum in the share. Long-term investors should enter if the stock maintains Rs 313 level and moves up. They should keep a stop loss at Rs 283 level (previous swing low) on a weekly closing basis.

One day time frame: (Chart 2)

On a daily time frame, you should note from the below chart that Vedanta stock has been trading in a Bullish Channel. Also, note that it has been ably taking support on the 50-day EMA line and bouncing back. On October 11, 2021, the scrip took support on the 50-day EMA line and bounced back to make a high of Rs 385.90 after which we saw a pullback. After forming a Bearish Marubozu Candle on October 22, 2021, the share has formed a Doji Star/Dragonfly Doji Candle. There is a high probability of reversal going forward if we observe an upward move in the stock for the rest of the week. RSI line has taken support at a level of 50 and has moved slightly above 53. With the increase in volumes, we expect to see positive momentum on the scrip. Positional traders should enter only if we see a closing above Rs 330. They should maintain a stop loss at Rs 314 on a daily closing basis. Our view will negate this level.

Conclusion:

We expect Vedanta stock to maintain positive bias and head higher from current levels. Short-term traders should take a position above Rs 325 level. They should keep a strict stop loss of Rs 319 on a daily closing basis. Note that our view will negate this level.