Long-Term Triangle Breakdown; F&O Stock Shows ‘Massive Downside’!

  • Stock Market Analysis
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The Nifty 50 index is witnessing increased selling pressure going into the session’s close, currently trading 0.66% down at 16,963, by 3:02 PM IST. All sectors are trading with a cut with Nifty Media leading the plunge with a 2.3% fall.

With again a gloomy session, many stocks have been seen falling off their highs and another candidate that is looking to plunge hard is Tata Power Company Limited (NS: TTPW ). It is an integrated power company engaged in the generation, transmission, distribution and trading of electricity, having a market capitalization of INR 63,938 crores.

Image Description: Weekly chart of Tata Power

Image Source: Investing.com

The stock had been a laggard for more than 2 years. For all this time it has only moved sideways in a very broad range, testing the patience of investors. But the times are probably going to be tougher from here for investors as the stock has just delivered a massive breakdown from an asymmetrical triangle pattern on the weekly chart.

Talking about the pattern, it is a volatility contraction pattern that depicts an increasingly squeezed movement of the stock with lower highs and horizontal support levels. It is a bit difficult to gauge beforehand where the eventual breakout would be seen, but today, the stock noticeably fell below the support of INR 195, falling 3.77% to INR 192.6. If the stock closes below the support level, then the breakdown would be confirmed on the weekly chart as today is Friday.

Another important this about this pattern is, the stock has taken a very long time to form this descending triangle, which has exponentially increased the probability of the complete trend reversal, from neutral to a bear trend. However, due to this long time frame, it becomes difficult to trade this stock on account of distant levels. But the gist of the analysis is, long positions might get in trouble from here on.

The targets on the downside are surprising. There is a decent probability of the stock falling to around INR 150 in the next couple of months, as per the dimensions of the pattern. Also, there are no support levels in the vicinity till INR 140, which makes the chart even more bearish. Traders can use bounces on the way down to initiate their short positions. Buying the dip from here might result in increased losses.

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  • ranga sri @ranga sri
    MACD, ADX,ADX D- And ADX D+, Higher % Delivery Selling at Sup level, all confirm weakness below  192 for Tgt upto 172  and below.Option traders should profit from Buying PE.Good Spotting and Analysis by  Aayush Khanna Ji.
    Like 0
  • Kamaljit Singh @Kamaljit Singh
    Volume is very very less.
    Like 0
  • Satish More @Satish More
    This Tata power stock is may driven by some big operators so some market operators are taking stock down so that all retail investor will sell stock then these operators will increase the Stock price
    Like 0
  • vineet sehgal @vineet sehgal
    now if you see, its at the weekly support of 100 ema... anyways when markets are going down, everything is down
    Like 3

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