The stock skyrocketed 14 per cent breaking through a key hurdle in the previous week. After taking support at the important level of Rs 286 in July and again in late August , the stock reversed upwards forming a double bottom; this is a bullish reversal pattern. The stock decisively broke out of the pattern neckline at Rs 330 in early October. Subsequently, it extended its uptrend.
Since the August low of Rs 286, the stock has been on a medium-term uptrend. It trades well above its long- and medium-term moving averages.
However, the stock is currently testing its significant long-term resistance at Rs 400. The stock previously tested this in April 2012 and 2013 and failed to break through.
Indicators in the daily chart have entered the overbought levels.
Moreover, the stock has breached the upper boundary of the Bollinger Bands, indicating overbought. Hence, a near-term correction to Rs 380 or Rs 370 cannot be ruled out.
Significant support below these levels is positioned at Rs 350 and Rs 330.
A conclusive fall below Rs 330 will mar the stock's medium-term uptrend and pull it down to Rs 300 or to Rs 286.
Nevertheless, a decisive break above its long-term resistance at Rs 400, following a minor correction, can take the stock northwards to Rs 450 in the coming months.
United Breweries (Rs 959.1)
The stock gained 14 per cent with good volumes last week. It decisively moved out of a narrow sideways movement in the Rs 800-875 range.
Since its January 2012 low of Rs 339, the stock has been on a long-term uptrend. Medium as well as short-term trends are also up.
The stock hovers well above its 50- and 200-day moving averages. Indicators in the daily chart feature in the bullish zone, cushioning the stock's uptrend.
Indicators in the weekly chart have now entered the bullish zone from the neutral region.
But, the stock can encounter an important resistance at Rs 1,000. Inability to surpass this level will confine the stock to the Rs 875-Rs 1,000 range.
Next important supports for the stock are positioned at Rs 800 and Rs 750. Only a strong close below Rs 750 will reverse the stock's medium-term uptrend and pull it down to Rs 700 or even to Rs 650. An emphatic break above Rs 1,000 will pave way for an up-move to Rs 1,100 in the medium-term.
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