A Sweet ‘Triangle Breakout’ Propelled this Stock 4% Up!

  • Stock Market Analysis
Aayush Khanna/Investing.com - Investing.com

As the markets seem stable on Thursday, after a profit booking session a day before, traders can still look for long opportunities, especially in the small-cap and mid-cap spaces. One counter that is luring investors is Olectra Greentech Limited (NS: OLEC ). It is engaged in the manufacturing of polymer insulators, having a market capitalization of INR 6,030 crores.

If you love volatility contraction patterns, you should have a look at the price chart of Olectra Greentech shares. The stock has formed a classic asymmetric triangle chart pattern on the daily time frame, which is an Ascending triangle. In this, the resistance of the triangle (the upper trendline) remains almost horizontal depicting a consistent selling pressure from the same levels throughout the triangle formation.

Image Description: Daily chart of Olectra Greentech with volume bars at the bottom

Image Source: Investing.com

However, the support of the pattern (the lower trendline) keeps on rising as investors become more and more impatient to buy the company's shares. This behavior gradually increases the support, hence the lower trendline points toward the upside as the triangle formation progresses.

Yesterday, the stock delivered an upside breakout from this pattern, as it surged past the resistance of INR 725. Today, a follow-up move took place as it continued its rally with a 4% gain to INR 764, by 12:56 PM IST. As long as the stock trades above the resistance, the broader picture remains bullish.

A retest to the breakout level of INR 725 might be an ideal entry point for traders who missed the rally. Looking at the dimensions of the pattern, the stock can easily travel to the next level of INR 860 - INR 870 in the near future. Although today’s volume of 3.61 million shares so far is not very high, it is still more than double the 10-day average of 1.61 million shares.

The ideal stop-loss level for such patterns is below the lower trendline support which also helps to trail exit levels and consistently keeps on minimizing the max risk.

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  • Raj Kumar @Raj Kumar
    Hi it is into manufacturing of Electric Buses
    Like 0
  • girdhari chhabriya @girdhari chhabriya
    You are a technical genious ji🌹🌹🕉️🙏
    Like 1
    • Aayush Khanna @Aayush Khanna
      Thanks, Girdhari :)
      Like 0

      • Comment Guidelines

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  • namami ghosh @namami ghosh
    excellent explanation...
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    • Aayush Khanna @Aayush Khanna
      Thanks, Namami :)
      Like 0

      • Comment Guidelines

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      • Avoid profanity, slander or personal attacks directed at an author or another user.
      • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
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