Following marking of its most high near 406 levels, VEDL witnessed a sharp secular corrective move. This move on the downside saw the stock paring over 49% of its value from its peak over the past four and half months. This corrective move also saw the stock marking its low point near 206 in the first week of July.

However, over the past couple of weeks, the stock has made some fierce attempts to mark a bottom for itself. The most recent price action shows that RSI has shown a strong bullish divergence against the price. While the price marked lower bottom, the RSI did not. Occurances of a bullish divergences on the lead indicators like RSI contribute in a very potent manner while the stock attempts to mark a bottom for itself; more so if such bullish divergences emerge after a meaningful decline.

The stock has rolled over the improving quadrant of the RRG when benchmarked against the broader NIFTY500 index; this denotes an end to the period of potential underperformance of the stock.

There is also a formation of a small inverted head and shoulder pattern; this is a kind of a bullish reversal pattern. However, it has developed under less number of days; therefore, it may not be fractal be visible on the highe timeframe charts.

RSI has also marked a fresh 14-period high and this is bullish.

Broadly speaking, any strong move above 236 may lead to a potential reversal of trend in this stock. If this happens on the expected lines, the stock may test 265 – 272 levels over the coming weeks.

Foram Chheda, CMT