Inverse H&S Breakout: F&O Stock Depicts 10% Upside, ‘At Least’!
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Despite a lackluster movement in the Indian market, with the index in a seesaw mode, one counter that is looking to skyrocket from the current levels, all thanks to the formation of a beautiful Inverse Head & Shoulders chart pattern is Max Financial Services Limited (NS:).
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The company is essentially an insurance business with a market capitalization of INR 24,636 crores. Although, the stock is not cheap, with the current P/E ratio of 97.23, but that’s the story of the entire insurance space. From the last few sessions, insurance stocks are gaining traction and defying market fall as investors are gaining keen interest in this sector.
MFSL is also having a good week and has gained around 8.9% since Monday, however, the main attraction of this counter is the formation of a very prominent trend reversal pattern which is catching many eyeballs.
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Image Description: Daily chart of MFSL with volume bars at the bottom
Image Source: Investing.com
After facing a prolonged downtrend since July last year, it is the first time that a visible sign of a trend reversal is being witnessed on the daily chart. The Inverse H&S pattern is indicative of a halt in the ongoing downward trend and a reversal to an impending upside direction from here. This pattern took approximately 2.5 months to form and today, the stock completed its right shoulder which is the last phase and surged 3.4% to INR 738, by 11:53 AM IST, to deliver a breakout above the neckline resistance, which was at around INR 730.
As this pattern has been formed at around the 52-week lows of the stock, therefore the potential upside from here could be huge. However, looking at the dimensions of the pattern, a roughly 10% target from the neckline resistance can easily be expected in the near term, which is around INR 800, or roughly a 10% gain.
But the chart structure is quite promising and it won’t be surprising if the stock bolsters to around INR 880 from here. For the short term, investors can watch out for the level of around INR 655 as a support, which is approximately the low of the right shoulder. If the stock tanks below it, then the validity of the pattern would be negated. However, for a slightly longer-term horizon, maintaining an exit level at around INR 625 for the upside potential of INR 880 could also be a good option.
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Despite a lackluster movement in the Indian market, with the index in a seesaw mode, one counter that is looking to skyrocket from the current levels, all thanks to the formation of a beautiful Inverse Head & Shoulders chart pattern is Max Financial Services Limited (NS:).
The company is essentially an insurance business with a market capitalization of INR 24,636 crores. Although, the stock is not cheap, with the current P/E ratio of 97.23, but that’s the story of the entire insurance space. From the last few sessions, insurance stocks are gaining traction and defying market fall as investors are gaining keen interest in this sector.
MFSL is also having a good week and has gained around 8.9% since Monday, however, the main attraction of this counter is the formation of a very prominent trend reversal pattern which is catching many eyeballs.
Image Description: Daily chart of MFSL with volume bars at the bottom
Image Source: Investing.com
After facing a prolonged downtrend since July last year, it is the first time that a visible sign of a trend reversal is being witnessed on the daily chart. The Inverse H&S pattern is indicative of a halt in the ongoing downward trend and a reversal to an impending upside direction from here. This pattern took approximately 2.5 months to form and today, the stock completed its right shoulder which is the last phase and surged 3.4% to INR 738, by 11:53 AM IST, to deliver a breakout above the neckline resistance, which was at around INR 730.
As this pattern has been formed at around the 52-week lows of the stock, therefore the potential upside from here could be huge. However, looking at the dimensions of the pattern, a roughly 10% target from the neckline resistance can easily be expected in the near term, which is around INR 800, or roughly a 10% gain.
But the chart structure is quite promising and it won’t be surprising if the stock bolsters to around INR 880 from here. For the short term, investors can watch out for the level of around INR 655 as a support, which is approximately the low of the right shoulder. If the stock tanks below it, then the validity of the pattern would be negated. However, for a slightly longer-term horizon, maintaining an exit level at around INR 625 for the upside potential of INR 880 could also be a good option.
