Stock Shoots Over 4% on the back of ‘Triangle Breakout’!

  • Stock Market Analysis

As the last day of the week started on a positive note, you could find many stocks doing well today. The same is the story with VIP Industries (NS: VIPI ) shares which are making investors go cock-a-hoop. Not just retail investors, but biggies such as FIIs and mutual funds, having a stake of 8.95% and 13.12% in the company, respectively are also benefitting from today’s gains.

Over the last one year, the stock delivered a market-beating return of 30.59%, compared to a negative return of 9.68% of the NIFTY Smallcap 100 index. 

Image Description: Daily chart of VIP Industries with volume bars at the bottom

Image Source: Investing.com

Today, the share price of VIP Industries rallied over 4% to the day’s high of INR 746.65, currently trading a bit lower at 730.3, by 9:58 PM IST. Today’s rally resulted in a symmetrical triangle breakout on the daily chart, as the stock surged past the upper trendline resistance with ease. This pattern had been in the making for around 40 days as the stock moved sideways and eventually moved beyond the contracting range on the upside in today’s session. 

This volatility expansion can also be depicted through Bollinger Bands® which are excellent in projecting the volatility of the stock via dynamic bands. So firstly, the breakout from the triangle pattern itself is showing a volatility expansion, plus the Bollinger Bands® are also indicating to the same, as the stock is currently trading above the upper band of the Bollinger Bands®. Both volatility signals which work on different parameters to gauge the expansion/contraction in volatility are pointing to the same result. 

Although, the stock needs to close above the band in order to denote it as a volatility breakout for which one has to wait for the session’s close. Once that happens, the stock could show a sharp rally in the next couple of weeks and as per the target mechanism of the pattern, a level of around INR 820 in the future is achievable. This is a decent upside potential of around 12% from the CMP. 

This is too early to take volume figures into consideration as it’s not even been an hour of trading into the session, but the figure so far is 270K shares, which has already surpassed the 10-day average volume of 215K shares. On the downside, the lower trendline of the triangle can be extended to be used as a trailing stop loss.

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  • namami ghosh @namami ghosh
    very coherent analysis on volatility... guruji is back with a big bang
    Like 1
    • Aayush Khanna/Investing.com @Aayush Khanna/Investing.com
      :)
      Like 1
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