Chart Check: A breakout from a double bottom pattern makes this hotel stock an attractive buy

Lemon Tree Hotels, part of the hotels and resort industry, rallied more than 10 per cent in a week compared to a little over 1 per cent upside seen in the Nifty50 in the same period.

The recent momentum helped the stock to breakout above a double bottom pattern on the weekly charts which is a bullish sign.

The stock recently hit a fresh 52-week high above its resistance zone of 70-71 at Rs 74.55 on 5 August 2022.


Short-term traders can look to buy the stock on dips for a possible target of Rs 90 in the next 3-4 weeks, suggest experts.

A double bottom pattern is usually formed at the bottom and indicates the end of a falling market. The pattern is formed by two clear bottoms separated by a top. The confirmation occurs when the price goes above the resistance line. Also Read

On the price front, the stock is trading above most of the short- and long-term moving averages such as 5,10,20,30,50,100, and 200-DMA.

The relative strength index (RSI) is at 68.4. RSI below 30 is considered oversold and above 70 is considered overbought, Trendlyne data showed. MACD is above its center and signal line, this is a bullish indicator.

On the weekly charts of Lemon Tree, we can spot that prices are in a clear uptrend while forming higher high, higher low formations and having a rising steepness in the price trend.

The stock is currently trading at its 52-week high level which tells that the stock is in strong momentum.

“In the latest week prices gave a breakout from the double bottom pattern, which is a bullish pattern. The pattern is formed around the level of 59, where we can witness a change in the polarity by the prices,” Vidnyan Sawant, AVP - Technical Research, GEPL Capital, said.

On the daily timeframe prices have sustained above upper Bollinger Band, which indicates that the volatility in the prices are rising for upside movement.

“RSI plotted on daily as well as on weekly timeframe both have sustained above 60 mark which confirms that the stock as strong momentum in the prices,” he added.

“Going ahead, we expect the prices to rise higher till the level of Rs 90 where one must place a stop loss at Rs 65, strictly on the closing basis,” recommends Sawant.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)