A Sweet ‘Triangle Breakout’ Propelled this Stock 4% Up!

As the markets seem stable on Thursday, after a profit booking session a day before, traders can still look for long opportunities, especially in the small-cap and mid-cap spaces. One counter that is luring investors is Olectra Greentech Limited (NS:OLEC). It is engaged in the manufacturing of polymer insulators, having a market capitalization of INR 6,030 crores.

If you love volatility contraction patterns, you should have a look at the price chart of Olectra Greentech shares. The stock has formed a classic asymmetric triangle chart pattern on the daily time frame, which is an Ascending triangle. In this, the resistance of the triangle (the upper trendline) remains almost horizontal depicting a consistent selling pressure from the same levels throughout the triangle formation.

Image Description: Daily chart of Olectra Greentech with volume bars at the bottom

Image Source: Investing.com

However, the support of the pattern (the lower trendline) keeps on rising as investors become more and more impatient to buy the company's shares. This behavior gradually increases the support, hence the lower trendline points toward the upside as the triangle formation progresses.

Yesterday, the stock delivered an upside breakout from this pattern, as it surged past the resistance of INR 725. Today, a follow-up move took place as it continued its rally with a 4% gain to INR 764, by 12:56 PM IST. As long as the stock trades above the resistance, the broader picture remains bullish.

A retest to the breakout level of INR 725 might be an ideal entry point for traders who missed the rally. Looking at the dimensions of the pattern, the stock can easily travel to the next level of INR 860 - INR 870 in the near future. Although today's volume of 3.61 million shares so far is not very high, it is still more than double the 10-day average of 1.61 million shares.

The ideal stop-loss level for such patterns is below the lower trendline support which also helps to trail exit levels and consistently keeps on minimizing the max risk.

Read More on Nifty 50 : FY23 Wrap: 3 Nifty 50 Cos. with HIGHEST Profit Margins!

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com's discretion.

Drop an image here orUpload from your computerSupported formats: *.jpg, *.png, *.gif up to 5mb

Drop an image here orUpload from your computer

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com's discretion.

Drop an image here orUpload from your computerSupported formats: *.jpg, *.png, *.gif up to 5mb

Drop an image here orUpload from your computer

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com's discretion.

Drop an image here orUpload from your computerSupported formats: *.jpg, *.png, *.gif up to 5mb

Drop an image here orUpload from your computer