The breakout has opened room for the stock to head towards a fresh record high near Rs 400 level in the next 3-4 weeks, suggest experts.
The stock rose from Rs 288 as on 23 May 2023 to Rs 370 as on 21 August 2023 which translates into an upside of over 28% in 3 months.
It rose more than 7% in a week. The momentum helped the stock to hit a fresh 52-week high of Rs 378 in intraday trade on 22 August 2023.
The recent surge in the stock price also pushed the stock above the neckline of an inverse Head & Shoulder pattern on the weekly charts. The neckline was placed above Rs 325.
An inverse head & shoulder pattern is the mirror image of the head and shoulder pattern and is a bullish signal.
It is defined as three bottoms with the middle bottom (head – marked as H) significantly lower than the other two bottoms (left and right shoulders – marked as S). Also Read
The momentum has also placed the stock in the overbought zone; hence, some consolidation could be on the cards.
The daily Relative Strength Index (RSI) is at 71.3. RSI above 70 is considered overbought. This implies that stock may show pullback, Trendlyne data showed. The daily MACD is above its center and signal Line, this is a bullish indicator.
“The MHRIL stock has steadily followed an upward trajectory, consistently marking higher highs and higher lows, indicative of a favorable sentiment,” Omkar Patil, Technical Research Associate at GEPL Capital, said.
“There’s a clear breakout from an inverse head & shoulder pattern in the stock’s movement, suggesting a possible sustained upward trend. This pattern is notably seen around the channel’s support level,” he said.
“The stock prices have remained steadfastly above the 12-week Exponential Moving Average (EMA), a metric that has traditionally served as a reliable dynamic support. In line with this positive outlook, the RSI momentum indicator displays a range shift, underlining the stock’s growing momentum,” he highlighted.
“Going ahead, we expect the prices to move higher to the Rs 400 level where the stop loss must be Rs 340 strictly on the closing basis,” recommends Patil.
(Disclaimer: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of the Economic Times)