Technical Stock Pick: A breakout from a 3-year rectangle pattern can push Petronet LNG to fresh record highs; should you buy?

Short-term traders can look to buy the stock for a possible target above 300 levels which will take the stock to a fresh record high, suggest experts.

The stock hit a fresh record high of Rs 296 on 6th February 2024, but it failed to hold on to the momentum. It witnessed some profit taking but it is holding above the neckline of the rectangle pattern which is placed around 250 levels.

The stock gave a breakdown below 250 levels in January 2021. However, it recouped some losses in the next few months but failed to hold above the 250 mark.

Petronet LNG stock witnessed price-wise correction and the stock found support around 200 levels in March 2022, June 2022, October 2022, and then again in November 2023.

After making a low in November 2023 the stock witnessed strong momentum which helped the stock to break out from the rectangular pattern in January 2024.The stock rose more than 7% in a month and over 40% in the last 3 months.The stock has been in an uptrend post the breakout. Technical and derivative data suggest that bulls are here to stay, suggest experts.

In terms of price action, the stock is trading above most of the crucial short- and long-term moving averages such as 5,10,30,50,100 and 200-DMA which is a positive sign for the bulls.

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The daily Relative Strength Index (RSI) is placed at 65. RSI below 30 is oversold and above 70 is considered overbought, Trendlyne data showed.

“Petronet LNG has made a higher bottom formation and is trading above 20 & 50 DMA with good volume on the daily chart. Also, on the weekly line chart, the stock has given a Bullish Rectangle pattern breakout above 280 level,” Shilpa Rout, Derivatives Lead Analyst, Prabhudas Lilladher, said.

On the derivative front, Petronet future saw a long Built-up with an OI 0.3% & trading above the VWAP level of 288.30.

“Option chain suggests 300 CE writers are aggressively active with more than 5 lakh OI & 270 PE writers holding maximum exposure for this series,” she said.

“Max pain can be seen at 282 levels so with the support of 270 levels one can go long in this counter for an upside target of 340,” recommended Rout.

(Disclaimer: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of the Economic Times)