ITI surges over 8 per cent; gives pennant pattern breakout

The stock of ITI Limited has given a pennant pattern breakout on the daily timeframe. The breakout was confirmed by the above 50-day average volumes.

The pennant is a short-term trend continuation pattern and it has conical bodies that are formed during a period of consolidation. Price consistently reaches higher lows and lower highs, creating two converging trendlines that forms this conical shape. The breakout above the downward sloping trendline signals that the previous uptrend has resumed.

As the stock is trading near to its 52-week high, it is trading above all the short and long-term moving averages. The stock is meeting Daryl Guppy’s multiple moving averages set up rules as it is trading above both the short and long-term moving averages.

Interestingly, the relative strength index (RSI), which is a momentum indicator in the daily timeframe, turned up from the 60-mark and in the bullish trend, we have seen that the RSI does not move below the 60-mark. The daily and weekly MACD stays bullish as it is trading above its zero line and signal line. Further, the ADX is very strong at 43.50. The -DI is much below +DI and ADX is above -DI and +DI. This shows a technical strength in the stock. 

Going ahead, we expect the bias to remain positive as long as the stock sustains above Friday’s low of Rs 104.25 level. On the higher side, the level of Rs 120, followed by Rs 138, would be seen as the next major resistance for the stock.

On Friday, the stock of ITI closed at Rs 111.95 per share, surged by 8.37 per cent. The stock opened at Rs 105.55 per share and hit an intraday high of Rs 113.65 and a low of Rs 104.25 per share on NSE.