Firstsource Solutions gives pennant breakout

Firstsource Solutions gives pennant breakout

Vinayak Gangule
/ Categories: Trending

The stock of Firstsource Solutions Limited had formed a reversal hammer candlestick pattern as on March 24, 2020, and thereafter, marked the sequence of higher tops and higher bottoms.

The stock has relatively outperformed the frontline indices in the current leg of the upward rally. Relative strength comparison with Nifty 500 and Nifty 50 has reached new heights.

After registering a high of Rs 67.85, the stock has witnessed a minor correction and formed a pennant pattern. During the formation of the pennant pattern, mostly, the volume activity was below the 50-day average. The pennant is a short-term trend continuation pattern and has conical bodies that are formed during a period of consolidation. The breakout above the downward sloping trendline signals that the previous uptrend has resumed.

Today, the stock gave a breakout of pennant pattern along with robust volume. Additionally, the stock has formed a sizeable bullish candle on the breakout day. All the moving averages based trade set-ups are showing a further bullish momentum in the stock.

An interesting observation is witnessed on the daily RSI. In the recent minor corrective mode, RSI never sustained below the 60 mark, which indicates that the stock is in a super bullish range as per the RSI range shift rules. The other volume-based indicators like OBV and Money Flow Index are also very strong. Moreover, the +DI moved above ADX thereby, suggesting that the trend will strengthen further.

Going ahead, as per the measure rule of Pennant pattern, the first resistance for the stock is placed around Rs 75, followed by Rs 83. On the downside, supports are seen around Rs 63-Rs 62.80 levels as it is a confluence of 13-day EMA and the upward sloping trendline support.

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