Tanla surges 15 per cent, gives Pennant pattern breakout

Tanla surges 15 per cent, gives Pennant pattern breakout

Bhagyashree Vivarekar
/ Categories: Trending, Technicals, Markets

Small-cap IT software products company, Tanla Solutions, surged as much as 15 per cent from its previous close. The big move was supported by spurt in volumes by 3.99 times. Company also presented its shareholding pattern for December 2017 quarter wherein the promoters have increased their stake from 30.08 to 30.63 per cent.

Technically, the stock has been moving in a rectangular pattern with lower trendline at 30 levels and upper trendline at 40.70 levels, since May 2017. The stock had broken out of its major multiple resistance at 40.70 levels on December 27 with huge volumes. However, the 14-period RSI was quoting 78, i.e., in the overbought zone. Thereby, the stock witnessed correction to consolidate for 8 days forming a kind of Pennant Pattern on the daily time frame. During Tuesday's trade, the stock gave a pennant pattern breakout at 42 levels. The breakout was yet again supported by volume spurt and 14-period RSI positive crossover.

Considering the weekly time frame, the stock has rounding bottom pattern in the making which has its neckline level at 53.70 levels. Hence, with or without a pullback we expect 3 to 7 points upside in the near term from Tuesday’s closing. Above 53.70, the stock may see some more upside in the medium term.

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