Delta Corp on verge of giving downward channel breakout

The stock of Delta Corp Limited had formed an inside day and NR7 pattern (ID/NR7) as on August 03, 2020, and thereafter, witnessed nearly 43 per cent upside in 13 trading sessions. However, after registering a high of Rs 123.50, the stock has witnessed correction. During the correction, it formed a falling channel. The correction is halted near 61.8 per cent Fibonacci retracement level of its prior upward move (Rs 85.05-116.95) and coincides with the support line of the downward channel.

Currently, on the daily timeframe, the stock is on the verge of giving a breakout of the downward sloping trendline, formed by connecting swing highs from August 20, 2020. At the same time, on the weekly timeframe, the stock has formed a sizeable bullish candle. In addition to this, last week, the volumes recorded were above the 100-week average, which is a sign of accumulation.

The stock's relative strength index (RSI) has reached its highest value in the last 14-days, which is bullish. Also, it has managed to close above its previous swing high. The fast stochastic is trading above its slow stochastic line. Moreover, the +DI is trading above -DI, and the ADX is also improving since the last five trading sessions. This structure indicates that the uptrend is strengthening.

Going ahead, in case, the stock moved above the resistance zone of Rs 117-Rs 118, we may see a bullish momentum in the stock. While on the downside, the 20-day EMA is likely to act as short-term support for the stock, which is currently placed at Rs 108.80 level.