Short-term traders can look to buy the stock now while investors holding the scrip can accumulate it on dips.
The momentum helped the stock to hit a record high of Rs 4070 on the BSE on 23 August 2023.
The stock witnessed a corrective phase after it touched a high of Rs 3860 on 2 May 2022. The stock underwent a period of consolidation and found support above Rs 2700 in December before bouncing back.
The ‘Cup and Handle’ pattern is easy to identify. There are two parts of this pattern wherein one part is a U-shape cup and another one is a small handle.
The handle gets formed when the stock undergoes a period of consolidation, and the pullback usually traces at least one-third of the cup.
The stock gave a breakout from the neckline of the Cup pattern in June 2023 when the stock touched 4000 levels. The stock underwent a period of consolidation beginning June.The financial services stock largely moved in a range June onwards and gave a breakout from the swing high of Rs 4028 on 12 June 2023. It then hit a record high in August.
In terms of price action, the stock is trading well above most of the crucial short-long-term moving averages such as 5,10,20,30,50,100 and 200-DMAs on the daily charts which is a positive sign for the bulls.
The daily Relative Strength Index (RSI) is at 61.5. RSI below 30 is oversold and above 70 is considered overbought. The daily MACD is above its center and signal line, which is a bullish indicator.
“CRISIL stock prices have given a breakout with rising volumes from the one-year-long cup pattern. The ticker is in a strong uptrend with the formation of higher highs and higher lows on the short term as well as long term charts,” Aditya Thukral, an independent analyst, said.
This breakout has happened a few weeks before and since then, the stock has been sustaining above it and consolidating with falling volumes which suggests accumulation, he said.
Prices are well placed above all the major exponential moving averages viz. 50-day, 100-day and 200-day. Previous resistances continued to provide support to the stock prices at every juncture, following the principle of polarity.
“This accumulation is expected to end soon, and the uptrend continuation is expected to happen in the stock prices where longs should have stop losses below 3600 on a weekly closing basis which is the previous resistance level,” highlights Thukral.
“On the upside, longs in CRISIL can expect target levels of 4450 in the next 2 months. The target price level is the 150% extension of the cup pattern,” he recommends.
(Disclaimer: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of the Economic Times)