Ashok Leyland share price: A drop under Rs 118 may test lower support till Rs 112 level, says Bonanza Portfolio

Ashok Leyland shares have managed to multiply more than four times from the lows of March 2020 but still, it is far away from the all-time top of May 2018 i.e. Rs 167.50, says Vishal Wagh, Research Head at Bonanza Portfolio. Ashok Leyland share price today is Rs 125, up Rs 1.2 or 1%.

So, the down cycle in Ashok Leyland stock has started much more before the pandemic. It has completed a nearly two-year down cycle and managed to retrace 76.40% of the total correction.

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On the monthly chart, it is not showing any significant correction in the last eleven months. Whereas, the weekly chart, it is showing flag patterns. The strong green candles followed by sideways consolidations and again new high get it to place. Normally, this kind of pattern has been observed in very strong stocks which managed to multiply the values in a very short duration. 

Vishal said that on the daily chart, post bearish diversions on RSI last month, the stock has corrected from Rs 138 to Rs 121 and now it is again testing its recent highs but the RSI has failed to show any kind of strength so far. Stock is sustaining well above 50 DEMA but closed below 20 DEMA and 8 days rolling pivot too. Due to recent corrections, the slope of 20 DEMA and 50 DEMA are flattish. It is an indication of sideways or time-wise consolidation.

As 76.40% retracement of the stock from its all-time high to the pandemic low has already done and stock is facing resistance over there one need to wait and watch for breaching recent high of 138.90 before any entry in this stock. On the flip side, below 50 DEMA of Rs 118, Ashok Leyland may go in the consolidation zone and may retrace at least 38.40% of the current rally from 33 levels i.e. Rs 98.

On the first day of the month, it has witnessed support at its weekly and monthly central pivots which has a top balance near Rs 125 zones and a lower balance near Rs 112 zones. Till the time Ashok Leyland is holding above Rs 118, there are all chances of it to cross recent highs. In failure to do so, it may test lower support till Rs 112 levels.