Technical Review: Siemens Forms a Bullish Inverted Head and Shoulders Pattern; could hit a new 52-week high


Siemens Ltd is up more than 30% last year, compared to an increase of more than 14% seen in the Nifty50, but the good news is that the uptrend is still intact and investors can hold positions for targets. closer to Rs 2700 over the next 3-6 months. .

The heavy equipment maker with a market capitalization of over Rs 87,000 cr hit a new 52-week high of Rs 2,577 on December 13, but since then the trend has reversed.

Siemens Limited offers products, integrated solutions for industrial applications for manufacturing industries, drives for process industries, infrastructure and smart buildings, efficient and clean power generation from fossil fuels and petroleum applications and gas.

The company derives approximately 77% of its revenue from its operations in India, while the remaining 32% comes from operations outside India.

The recent action seems to suggest that the stock is gaining support at lower levels. Siemens was up more than 2% in one week and almost 6% last month. If the trend continues, the stock could well break above 2577 and hit new highs over the next 3-6 months, experts suggest.

The stock has formed an inverted head and shoulders pattern on the daily charts. The stock found support near the 89-day EMA (green line). It broke through the resistance level last week, which paved the way for further upside.

An inverted Head and Shoulders pattern forms when the price falls to a low and then rises, in the second wave the price falls below the previous low and then rises. And, finally, the price drops but not as much as at the second trough.

A breakout occurs when the price starts rising after hitting the bottom and an upside breakout above the resistance level.

“The stock is in a long-term uptrend forming a higher high and higher low on the daily chart, i.e. each new high after an up move is higher than the previous high and each new low after a decline is higher than the previous low,” Ashish Chaturmohta, Director, Equity Research, Sanctum Wealth, said.

“The 89-day exponential move (green line) acts as support on the lows and the stock is trending higher. Although recently the price fell below the average, it rebounded above the average maintaining an upward trending structure,” he said.

On the daily chart, the price has been forming over the past few weeks, the action has formed bullish inverse heads and shoulders. Chaturmohta said the stock can be bought at the current levels and on the lows of 2400 with a stop loss of 2330 for the target of the 2700 and 2840 levels.

(Disclaimer: Opinions/suggestions/advice expressed here in this article are investment experts only. Zee Business suggests its readers consult their investment advisors before making any financial decisions.)


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