Investors Looking at this ‘Triangle Breakout’ for a 20% Target!

  • Stock Market Analysis

Among many promising breakout candidates, Take Solutions Ltd (NS: TAKE ) shares have come on my radar. It is an IT services and consulting firm with a market capitalization of INR 353 crores. It is one of the IT stocks that are still trading on lower levels, as compared to many peers in the same sector.

Since, September 2022, the stock had been facing stiff selling pressure whenever it tried to surge higher. As can be seen in the form of consecutively lower peaks, the intensity of selling increased as time passed. However, the support from the lower level was equally strong. The horizontal support at the bottom indicates that despite selling pressure, buyers were also consistently buying the stock whenever it fell to their desired level (INR 23).

Image Description: Daily chart of Take Solutions with volume bars at the bottom

Image Source: Investing.com 

This cumulative price action kept the stock moving in a contracting range which took the form of an Asymmetrical Triangle chart pattern. It is a form of Triangle wherein one of the boundaries is horizontal - the lower one in the case of Take Solutions. This is a volatility contraction pattern and depicts compression in volatility, which is a healthy sign of an impending move (although the direction is difficult to gauge).

To estimate the direction, the breakout needs to be watched. If it surges past the upper trendline, then an upward move is expected and a downward breakdown leads to the possibility of a start/continuation of a downtrend. 

Today, the share price of Take Solutions soared above the upper trendline, gaining 3% to INR 25.5, by 2:37 PM IST, comfortably hovering above the breakout point of around INR 25.20. The volume backing the move is kind of okish, with 449K shares, compared to the 10-day average volume of 294K shares. At least a 2x higher volume by the closing would be much better. 

Upon a successful breakout, the stock could be heading toward INR 31, as per the height of the triangle pattern. Looking at the massive selling spree that took place in this counter over the last 1.5 years, this level seems quite achievable. Even if the stock falls back below the trendline, the bearish view would take precedence once the support of INR 23 is breached on a closing basis. As there have been a couple of intraday spikes below it, which were not sustainable, hence a closing is a must.

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  • namami ghosh @namami ghosh
    learning a lot, Guruji
    Like 1
  • Thanigachalam Somu @Thanigachalam Somu
    we can see profit booking on each green candle. the breakout can b effective if no profit booking . even if profit booking occurs , volume shoots up
    Like 0
  • Dharma Nitheesh @Dharma Nitheesh
    everything you teach is useful to me
    Like 2
  • Dharma Nitheesh @Dharma Nitheesh
    thanks for the information
    Like 1
  • Devdas Darpelli @Devdas Darpelli
    Very well written article. Never knew there were so many charges. Thanks for sharing.
    Like 1
  • Deepesh Deshmukh @Deepesh Deshmukh
    please study the chart of Tata power also.
    Like 1

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