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Coforge surge more than 9 per cent; gives trendline breakout

Vinayak Gangule
/ Categories: Mindshare
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Coforge surge more than 9 per cent; gives trendline breakout

From the low of Rs 735.35, which was registered on March 24, 2020, the stock of Coforge Limited has maintained its rhythm of higher highs and higher lows. The stock has gained more than 180 per cent from its 52-week low and has given over 31 per cent returns from year-to-date.

However, after registering the high of Rs 2,079, the stock has witnessed minor correction. During this corrective phase, mostly, the volume is below the 50-day average, which suggests that it is just routing decline after a robust move.

Considering the daily timeframe, the stock has given a downward sloping trendline breakout formed by connecting swing highs since August 11, 2020. This breakout is confirmed by the above 50-day average volume. Additionally, the stock had formed an opening bullish Marubozu candle on the breakout day, which adds strength to the breakout. The opening bullish Marubozu candle has no shadow extending from the open price end of the body. An opening bullish Marubozu candle indicates extreme bullishness.

As the stock is at its all-time high, it is trading above all the short and long-term moving averages. The stock is meeting the criteria of Mark Minervini’s trend template. The current stock price is above both the 150-day (30-weeks) and 200-day (40-weeks) moving average price lines. Moreover, the 30 and 40-weekly averages are trending up and at the same time, they are in the desired sequence.

The relative strength index (RSI), which is a momentum indicator, is trading in a bullish territory in all the timeframes. The momentum indicator, MACD line, has crossed above the signal line, which resulted in the histogram turning positive.

Technically, all the factors are currently aligned in support of the bulls. Hence, we would advise the traders to be with a bullish bias. On the downside, an important support for the stock is placed at the zone of Rs 1,915-Rs 1,880 level.

On Friday, the stock of Coforge closed at Rs 2,090.60 per share, surged by 9.36 per cent. The stock opened at Rs 1,915 per share and hit an intraday high of Rs 2,102.90 and a low of Rs 1,915 per share on NSE.

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