Technical Stock Pick: This FY24 multibagger stock breaks out from inverse head & shoulder pattern
Varroc Engineering stock's breakout from inverse Head & Shoulder pattern led to a significant wealth increase for investors. Short-term traders eye Rs 600 target as experts anticipate a bullish trend towards Rs 595-613 in the coming weeks.
, part of the auto component space, has more than doubled investors’ wealth in the last one year and recent breakout from an inverse Head & Shoulder pattern has opened room for the stock to head higher.Short-term traders can look to buy the stock now for a possible target towards 600 levels, suggest experts.
The stock rose from Rs 249 as on 31 March 2023 to Rs 564 recorded on 2 April 2024 which translates into an upside of 126% in a year.
The auto component maker hit a record high of Rs 631 on 7th February 2024 but it failed to hold on to the momentum. It witnessed a decline towards 200-DMA on the daily charts and bounced back.
The Supertrend indicator triggered a bullish sign on 2nd April 2024 which suggests that the trend could well be on the upside.
The stock witnessed a steady uptrend after testing 200-DMA earlier in March. The stock has rallied more than 15% since March 2024.
Tracking the momentum, the auto component maker gave a breakout from an inverse Head and Shoulder pattern and the neckline was placed at Rs 520 earlier this week. The stock closed at Rs 558 on 2nd April 2024.
The Inverted Head and Shoulders pattern is a bullish reversal pattern characterized by three lows with the middle one (the head) being lower than the two outside ones (the shoulders), typically signaling a potential upward trend reversal.
“Varroc demonstrated a significant breakout above the neckline of the "Inverted Head & Shoulders" pattern at 520 with a robust bullish candle, signaling a potential shift from a downtrend to a positive trajectory,” according to a report authored by Rajesh Palviya, Senior Vice President of Technical & Derivatives Research at Axis Securities Ltd and his team.
The heightened volume activity witnessed at the breakout further amplifies market participation, reinforcing the significance of the breakout.
The stock's ability to maintain levels above key short and medium-term moving averages (20, 50, 100, and 200 days) signals a positive bias in its trajectory.
“The daily Relative Strength Index (RSI) remains in bullish territory, holding above both its reference line and the 50 mark, reinforcing a positive bias in the stock,” highlighted Palviya.
“Following the breakout from the Inverted Head and Shoulders pattern, the stock is anticipated to rally towards previous swing high, setting our targets at Rs 595-613 in the next 3-4 weeks,” he recommended.
(Disclaimer: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of the Economic Times)
Source: Stocks-Markets-Economic Times
