Pattern Identified: Flag and Pennant
Time Frame: Weekly Chart
Key Observations:
The chart pattern is showing the “Flag and Pennant” pattern on the weekly timeframe for DLF Ltd. (NSE). Here’s a detailed analysis:
Flagpole:
The chart shows a strong bullish rally, forming the flagpole. This represents a sharp upward move, typically driven by strong buying interest. The steep rise in price during this period indicates a significant momentum in favor of the bulls.
The flagpole is characterized by long green candlesticks with minimal retracement, which further confirms the strength of the bullish move.
Pennant:
After the strong uptrend, the price action consolidates, forming a pennant. The pennant is a small symmetrical triangle pattern, where the price is making lower highs and higher lows, indicating a temporary balance between supply and demand.
This consolidation phase is often seen as the market taking a “breather” before continuing its previous trend, which in this case is upwards.
Volume Analysis:
Typically, during the formation of the flagpole, you would expect to see increasing volume as the price rises sharply.
As the pennant forms, the volume usually decreases, reflecting the market’s indecision. This is a key characteristic of a pennant, as it indicates that the strong trend is pausing before potentially resuming.
A breakout from the pennant with a spike in volume would signal a continuation of the previous trend (in this case, upward).
Price Action:
The price has been trading within the boundaries of the pennant. A breakout above the upper trendline of the pennant would signal a continuation of the bullish trend.
Conversely, a breakdown below the lower trendline could indicate a potential reversal or deeper correction.
Target Projection:
If the price breaks above the pennant, the projected target is often calculated by adding the height of the flagpole to the breakout point of the pennant.
For example, if the flagpole is approximately 300 points, the target after a breakout could be around 300 points above the breakout level.
Key Levels:
Resistance: The upper trendline of the pennant acts as resistance. A breakout above this line is critical for the continuation of the bullish trend.
Support: The lower trendline serves as support. A breakdown below this level could lead to a deeper correction.
Conclusion:
The overall stock sentiment appears bullish, given the strong flagpole. However, the current consolidation phase within the pennant suggests caution until a clear breakout direction is established.
The chart pattern suggests a high probability of a bullish continuation if the price breaks above the pennant with increased volume. Traders might look for entry points on a confirmed breakout with a stop-loss placed below the lower trendline of the pennant. However, it’s essential to monitor volume closely to validate the breakout’s strength.
Disclaimer:
The information provided in this article is for educational and informational purposes only and should not be considered financial advice. Investment in the stock market involves risk, and you should conduct your research or consult a licensed financial advisor before making any investment decisions.
News for the day:
On Thursday, the Nifty 50 climbed 0.4%, marking its 11th consecutive session of gains and achieving its longest winning streak in nearly 17 years. Strong performances from companies like Reliance Industries, ITC, Tata Motors, HCLTech, and Bajaj Finserv supported this rise. The Sensex also increased by 0.43%, closing at 82,134.61.
The NSE Nifty50 has recorded its longest winning streak since October 2020, climbing 3.8% over 10 consecutive sessions. Bolstered by continuous local and institutional inflows, the index hit a record intraday high of 25,129.60 before closing at 25,052.35. The Sensex also saw gains, closing at 81,785.56, up 73.80 points, indicating ongoing market optimism.
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Gulshan Polyols Limited, a manufacturer and supplier of ethanol, fructose, sorbitol, and other industrial chemicals, saw its shares rise by 4% during the day’s trade. This surge came after Institutional Investor PGIM India Equity Growth Opportunities Fund Series 1 purchased 5 lakh equity shares at an average price of ₹216.75 per share.
Vaishali Pharma Limited shares jumped 6.6% to ₹202.4 on Thursday after the company’s board recommended issuing bonus equity shares in a 1:1 ratio and approving a sub-division/stock split in a 1:5 ratio. The bonus issue is intended to reward existing shareholders, increase liquidity, and broaden the shareholder base.
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NLC India Ltd. shares increased to₹288, up 4% from₹276.30, following the company’s announcement of a Power Usage Agreement with Telangana State DISCOMs for 200 MW of solar power under the CPSU scheme. The project is anticipated to generate 1,300 crore units of green energy and cut carbon emissions by 90 lakh metric tons over its lifetime.
Shares of Reliance Industries rose by 1.6% on Thursday following the company’s announcement of a plan to issue bonus shares in a 1:1 ratio. The stock hit an intraday high of₹3,074.8 before closing at₹3,044.75. According to an exchange filing, the company’s board will meet on September 5 to discuss the bonus share issuance.
Shares of Tantia Constructions Limited reached the 5% upper circuit limit on the BSE, trading at ₹43.7 on Thursday, following the receipt of a ₹3.74 crore order from the Belonia Division of South Tripura. The contract, awarded by the Government of Tripura, is for constructing an RCC bridge over Abhayacherra on Barpathari to Tulamura Road under the NABARD scheme.
