A ‘Long-Term’ Triangle Breakout with a 9% Rally & 1,800% Volume Jump!

  • Stock Market Analysis
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In the midst of a positive market, the share price of Advanced Enzyme Technologies Ltd (NS: ADEN ) seems to be coming under the spotlight. The company is in the business of specialty chemicals and has a market capitalization of INR 2,983 crores. It is primarily engaged in the research and development, manufacturing, and marketing of over 400 products developed from over 60 indigenous enzymes.

Today, the stock started catching investors’ attention from the opening tick as it opened the session with a massive gap up and continued to rally on the back of a follow-up demand. The stock rallied 9.7% to INR 292.7 after the news that a Foreign Portfolio Investor (FPI) Nalanda India Equity Fund bought 29.1 lakh equity shares of the company at an average price of INR 270.01, for a total of INR 78.2 crores.  

Image Description: Daily chart of Advanced Enzyme with volume bars at the bottom

Image Source: Investing.com

Soon after the news, retail investors were seen fleeing to buy Advanced Enzyme Technologies’ shares in a hurry. Today’s excessive demand for the shares led to the development of a massive breakout on the daily chart. Prior to the up move, the stock had consistently been falling from higher levels for the last many months. However, as the stock kept on making lower highs which showed investors’ impatience to sell the shares, equally strong demand at the bottom was present for a long time.

The stock kept on taking support from the level of around INR 260 multiple times. This turned out to be very strong support for the stock and kept it from falling further as the selling was going on from the higher levels. This whole price action led to the formation of a descending triangle pattern on the daily chart, the breakout of which (on the upside) was seen today.

Two things that are strongly in the favour of today’s breakout are - first, the gap up opening. A breakout backed by a gap up is an extremely strong indication of a change in the sentiments of investors than a normal price rally. Secondly, the volume for the day stood at over 8.8 million shares which is the highest one-day volume since March 2017. Also, it is 1,800% higher than the 10-day average volume of 462K shares.

As this trend reversal is looking to have quite a high probability, the estimated target to which the stock could travel amid the breakout is near INR 380. The strong support of INR 260 is still valid and a fall below this would negate the current breakout. 

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  • Jagan Mohan @Jagan Mohan
    recommendation at right time is important.
    Like 0
  • Jb chandan Chandan @Jb chandan Chandan
    No body can be 100% right.But your recommendations  seem well explained  in  simple  language  which shows  these are purely  on merit as against  lot of stuff available on line  which is  undoubtedly  planted. Love you dear.
    Like 0
  • Jagan Mohan @Jagan Mohan
    niit, birla soft etc given us huge losses. please check once before recommendations I.e right recommendations in wrong time and wrong recommendations on right time. As a elderly I bless you for your bright future. Take care
    Like 1
  • Jagan Mohan @Jagan Mohan
    ayush, majority recommendations are failing and its doubting your integrity. we appreciate your work but loosing confidence on you
    Like 1
  • Door Step Services @Door Step Services
    false breakout dude.. just chill.. and take a pill..
    Like 3
  • Door Step Services @Door Step Services
    false breakout dude.. just chill.. and take a pill..
    Like 2
  • Door Step Services @Door Step Services
    false breakout dude.. just chill.. and take a pill..
    Like 1
  • ankur rana @ankur rana
    cool... 2 weeks back i made position in it as it seems to be reversing
    Like 0
  • Rohit Thakur @Rohit Thakur
    Nice
    Like 0
  • Girish Kandhari @Girish Kandhari
    No comments.
    Like 0

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