ABB -Gladiator Stocks: Series 9.0 :: ICICI Securities, report

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Technical View Strategy: Buy ABB in the range of | 1315.00–1332.00 for a target price of | 1590.00 with a stop loss below | 1210.00 on a closing basis The share price of ABB has been in a strong uptrend since the beginning of 2014 and rallied past its 2012 and 2010 highs of | 1036 and | 976, respectively, in May 2014, thus signalling a major reversal of long term trend. The stock continues to stride northwards in a rising peaks and troughs fashion on the long term price charts. Key technical observations ¾ The stock has registered a breakout above the Double bottom pattern and seen consolidating above the breakout area (| 1260) over the last three weeks signalling strength in the price structure and offers fresh entry opportunity to ride medium term up trend ¾ Earlier, the stock formed almost identical low in August 2014 and October 2014 near | 985 with an intermediate high of | 1263. The strong resolution of price from bullish pattern signalled continuation of larger up trend in the stock ¾ The entire rally since February 2014 has been sustaining above the long term trendline as highlighted in the adjoining weekly interval price chart. It indicates a well defined uptrend indicating sustained buying emerging at elevated levels and at regular intervals ¾ The stock has recently bounced back taking support at the 61.8% retracement of the previous up move from October 2014 low of | 985 to December 2014 high of 1398. Also, the presence of 21 weeks EMA currently placed at | 1182 levels indicate strength in the price structure and strong support at lower levels ¾ Among oscillators, the weekly 14 periods RSI is seen consolidating above the bull market support reading of 50 and is sustaining above its nine period’s average. In contrast, the MACD is in a rising trend and sustaining above its signal line on the weekly chart highlighting the inherent strength in the price Conclusion: Based on the above technical evidence, we believe the stock is set to embark upon its next directional up leg towards | 1595 levels over the medium term. The 138.2% Fibonacci price extension of the last up move from November 2014 low of | 1061 to December high of | 1398 measured from the recent trough of | 1130 projects upside towards | 1595. Thus, it provides a good reward/risk setup to ride the ongoing uptrend

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