Radar: A BIG Pennant Breakout Amid 7% Rally!
It seems like the market will not stop till all bears get fried. The index jumped to an all-time high of 19,947.2, by 2:14 PM IST with the majority of the sectors trading in the green zone. Amid this bullish environment, one stock that is making some noise is Rail Vikas Nigam Limited (NS:) or simply RVNL.
It is a specialized finance company that undertakes project development, mobilization of financial resources and implements projects pertaining to Indian railways and has a market capitalization of INR 24,999 crores.
Image Description: Weekly chart of Rail Vikas Nigam Limited with volume bars at the bottom
Image Source: Investing.com
The stock skyrocketed by 6% to INR 127.3 and broke above the falling trendline resistance of a bullish Pennant pattern. This is a bullish continuation pattern and is known to resume the prior uptrend, upon a breakout. But more importantly, this pattern has been formed on the weekly time frame which holds a higher importance than the same pattern on a smaller time frame.
As the breakout is almost confirmed in today’s session, bulls might be in for a surprise. The target mechanism of this pattern is quite simple. The stock tends to surge by almost equivalent distance as it rallied prior to forming the triangle (the second phase of the pennant pattern).
In the case of RVNL, the stock moved from around IRN 60 to INR 140 in a jiffy and therefore the levels from this breakout could also propel the stock to over INR 200. This might take time but there’s absolutely no weakness on the chart and with a bull run in the broader markets, the likelihood of this level is high.
To curb the risk, traders can maintain a stop loss below the rising trendline support, which is around INR 110.
Read More: 2 Blue Chip Stocks Around 52-Week Low!
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It seems like the market will not stop till all bears get fried. The index jumped to an all-time high of 19,947.2, by 2:14 PM IST with the majority of the sectors trading in the green zone. Amid this bullish environment, one stock that is making some noise is Rail Vikas Nigam Limited (NS:) or simply RVNL.
It is a specialized finance company that undertakes project development, mobilization of financial resources and implements projects pertaining to Indian railways and has a market capitalization of INR 24,999 crores.
Image Description: Weekly chart of Rail Vikas Nigam Limited with volume bars at the bottom
Image Source: Investing.com
The stock skyrocketed by 6% to INR 127.3 and broke above the falling trendline resistance of a bullish Pennant pattern. This is a bullish continuation pattern and is known to resume the prior uptrend, upon a breakout. But more importantly, this pattern has been formed on the weekly time frame which holds a higher importance than the same pattern on a smaller time frame.
As the breakout is almost confirmed in today’s session, bulls might be in for a surprise. The target mechanism of this pattern is quite simple. The stock tends to surge by almost equivalent distance as it rallied prior to forming the triangle (the second phase of the pennant pattern).
In the case of RVNL, the stock moved from around IRN 60 to INR 140 in a jiffy and therefore the levels from this breakout could also propel the stock to over INR 200. This might take time but there’s absolutely no weakness on the chart and with a bull run in the broader markets, the likelihood of this level is high.
To curb the risk, traders can maintain a stop loss below the rising trendline support, which is around INR 110.
Read More: 2 Blue Chip Stocks Around 52-Week Low!
