Dilip Buildcon gives falling wedge pattern breakout

The stock of Dilip Buildcon Limited has formed a bearish squeeze alert like candlestick pattern as of August 21, 2020, and thereafter, witnessed a correction. The correction was over 24 per cent from the high of Rs 424. The correction is halted in between 38.2 per cent and 50 per cent retracement level of its prior upward move (Rs 190-Rs 424).

However, considering the daily timeframe, the stock has given a falling wedge pattern breakout. If the falling wedge pattern appears in a downtrend, it is considered a reversal pattern. It occurs when the price is making lower highs and lower lows, which form two contracting lines. The falling wedge usually paves the way for a reversal on the upside.

Further, this breakout is supported by robust volume of more than three times of 50-day average volume, indicating a strong buying interest by the market participants. The 50-day average volume was 1.05 lakh till now while today, the stock has witnessed a total volume of 3.98 lakh.

Interestingly, the daily RSI has given a breakout of the downward sloping trendline and it is in a rising trajectory, which is a bullish sign. The daily and the weekly stochastic oscillator is suggesting some bullish strength as well since per cent K is above the per cent D. Moreover, a positive divergence is clearly visible between the daily RSI, daily stochastic, and the stock price movement, which suggests a limited downside.

Going ahead, the 100-day EMA is likely to act as strong support for the stock, which is currently placed at Rs 331.60. While on the upside, the level of Rs 360, followed by Rs 372.50, would be seen as the next resistance zone for the stock.

On Friday, the stock of Dilip Buildcon closed at Rs 347.30 per share, surged by 3.94 per cent. The stock opened at Rs 335 per share and hit an intraday high of Rs 352 and a low of Rs 335 per share on NSE.