Ashok Leyland share price: Technical Analysis decoded

Sumeet Bagadia, Executive Director, Research at Choice Broking says that on the daily timeframe, Ashok Leyland has given a breakdown of Rising Channel formation, which indicates a bearish set-up in the counter. Moreover, Ashok Leyland stock has also slipped below 21 days Simple Moving Averages, which suggest some weakness for the near term. Ashok Leyland share price today is Rs 125.2, up Rs 1.8 or 1.5%.

Ashok Leyland Volumes has been falling down consecutively from the last three trading sessions, which shows that bear is taking a place. However, the Ashok Leyland stock is trading near its Bollinger Band support of Rs 121.70 levels and has a resistance of Rs 135.80 levels.

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Vishal Wagh, Research Head at Bonanza Portfolio highlights says Ashok Leyland has managed to multiply itself 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. So, the down cycle in the 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.

On the monthly chart of Ashok Leyland, 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. 

On the daily chart, post bearish diversions on RSI last month, Ashok Leyland stock has corrected from Rs 138 to Rs 121 and now it is again testing its recent highs but the RSI is failed to show any kind of strength so far. Stock is sustaining well above 20 DEMA and 50 DEMA and managed to close above 8 days rolling pivot too. 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.