BEL forms inverted head & shoulders pattern
After making an all-time high of Rs 193.40 in November 2017, Bharat Electronics Limited (BEL) went for a free fall. In the month of March 2020, it created a low of Rs 56. Having said, from August 2018 to December 2020, it was facing resistance at the supply zone, ranging from Rs 118 to Rs 125. However, last week, it breached this supply zone with increased volumes. And not just that, it also formed an inverted head & shoulders pattern on a weekly timeframe while in a downtrend. Meanwhile, the inverted head & shoulders is a bullish price chart pattern.
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Key takeaways
1. BEL formed an inverted head & shoulders pattern while the stock was in a downtrend on a weekly timeframe.
2. Increased volumes do confirm the strength of breakout from the neckline.
3. The stock is likely to witness a pullback from the present levels.
4. The near-term support and resistance is placed at Rs 114 and Rs 132, respectively.
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As can be seen in the above chart, BEL formed an inverted head & shoulders pattern in the weekly timeframe. Further, it breached the neckline-cum-supply zone with increased volumes. Having said, the stock might witness the pullback. Therefore, conservative traders should add this stock to their watchlist and wait for the stock to pull back at the supply zone-turned-demand zone before you enter any trade. Aggressive traders though can take the trade while adhering to strict stop-loss. Further, aggressive traders can also add and average out their positions if the stock witnesses a pullback.
Last week, the stock opened at Rs 116.20, made a low of Rs 113.40, and closed at Rs 126.40, after making a high of Rs 128. At the time of writing, the stock was trading at Rs 132.
Disclaimer:
This article is just for understanding purposes and should not be considered as a recommendation. Readers are advised to do their own research before making any investment decision. Further, DSIJ and its authors are not responsible for any kind of losses incurred.