Bullish Pennant Pattern: Stock Depicts ‘20% Upside’!
While many IPOs in the recent past haven’t performed well, some have started their journey on the upside. For instance, the share price of Life Insurance Corporation of India Limited (NS:), which tumbled from a listing price of INR 872 to a low of INR 588 has now surged 25% off the low to INR 738, technically ending its bear run.
Another recent listing that disgruntled investors after marking its debut on the Indian bourses with a consistent year-long decline and is now looking to pare some of the losses is PB Fintech Limited (NS:), more popularly known as Policy Bazar. The company’s market capitalization got eroded to INR 20,269 crores as its stock kept on making lower lows since listing, much like other over-hyped IPOs.
Image Description: Daily chart of PB Fintech with volume bars at the bottom
Image Source: Investing.com
The stock marked its debut at INR 1,150 in November last year and rallied to INR 1,470 in a jiffy, but the interest soon faded in a few days and it never witnessed a sustained uptrend after that.
However, after falling to an all-time low of INR 356.2 last month, the stock started to stage a comeback. There was a bullish divergence seen at the very bottom which was the first indication of a trend reversal that worked as a catalyst for the stock to reverse its course. After a quick rally from there, the stock started to consolidate in a tight range, which eventually materialized into a bullish pennant pattern.
This pattern is formed in the midst of a rally and is known to continue the prior uptrend, upon a successful breakout. Today, the share price of Policy Bazar broke above the upper trendline of the pennant pattern, resulting in the beginning of the continuation of the prior rally. As this pattern forms in the middle of the trend, the impending move tends to take the stock to a distance equivalent to the prior rally.
So, from here, we can expect the stock to rally to around INR 580, depicting a further upside potential of around 20% from the CMP of INR 485.6. On the downside, if the low of the triangle (which is the 2nd phase of a pennant pattern) gets breached, then the validity of this pattern becomes questionable. In the case of PB Fintech, if the stock breaks below INR 450, then bulls should re-evaluate their long positions.
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While many IPOs in the recent past haven’t performed well, some have started their journey on the upside. For instance, the share price of Life Insurance Corporation of India Limited (NS:), which tumbled from a listing price of INR 872 to a low of INR 588 has now surged 25% off the low to INR 738, technically ending its bear run.
Another recent listing that disgruntled investors after marking its debut on the Indian bourses with a consistent year-long decline and is now looking to pare some of the losses is PB Fintech Limited (NS:), more popularly known as Policy Bazar. The company’s market capitalization got eroded to INR 20,269 crores as its stock kept on making lower lows since listing, much like other over-hyped IPOs.
Image Description: Daily chart of PB Fintech with volume bars at the bottom
Image Source: Investing.com
The stock marked its debut at INR 1,150 in November last year and rallied to INR 1,470 in a jiffy, but the interest soon faded in a few days and it never witnessed a sustained uptrend after that.
However, after falling to an all-time low of INR 356.2 last month, the stock started to stage a comeback. There was a bullish divergence seen at the very bottom which was the first indication of a trend reversal that worked as a catalyst for the stock to reverse its course. After a quick rally from there, the stock started to consolidate in a tight range, which eventually materialized into a bullish pennant pattern.
This pattern is formed in the midst of a rally and is known to continue the prior uptrend, upon a successful breakout. Today, the share price of Policy Bazar broke above the upper trendline of the pennant pattern, resulting in the beginning of the continuation of the prior rally. As this pattern forms in the middle of the trend, the impending move tends to take the stock to a distance equivalent to the prior rally.
So, from here, we can expect the stock to rally to around INR 580, depicting a further upside potential of around 20% from the CMP of INR 485.6. On the downside, if the low of the triangle (which is the 2nd phase of a pennant pattern) gets breached, then the validity of this pattern becomes questionable. In the case of PB Fintech, if the stock breaks below INR 450, then bulls should re-evaluate their long positions.