Stock watch: Mahindra and Mahindra Financial to give trendline breakout?

It was in the month of April 2018, when Mahindra and Mahindra Financial had made an all-time high and since then, it started sliding southwards forming a series of lower highs and lower lows. During the pandemic led sell-off in the market, the stock further plunged to make a low of 76.1 in May 2020. However, as the optimism in the overall market caught pace, this stock again started ascending. But it faced resistance on its three-year downward sloping trendline in February 2021. With this, the stock further faced selling pressure and in August 2021 it made a higher low of 138. From this level, it again began to head northwards. As of today, the stock is again trading near its three-year falling trendline. Fascinatingly, the stock is also near the crucial Fibonacci level of 50 per cent (198 level).  

Mahindra and Mahindra Financial is currently trading above its 50-Day Exponential Moving Average (EMA). On weekly charts, the Relative Strength Index (RSI) is hovering above its 20-Day EMA of 54.62 at 63.85. Moving Average Convergence Divergence (MACD) had a positive crossover near the neutral line and is presently trading above its signal line in the positive territory. 

Above is the weekly chart of Mahindra and Mahindra Financial

The stock is hovering above its Parabolic SAR for the past nine weeks. The Commodity Channel Index (CCI) is presently below the 100 level at 93.06. Therefore, as per CCI and RSI, the stock has not yet entered the overbought situation to witness selling pressure. But on the other hand, the stock is trading near the upper band of the Bollinger band suggesting a pullback.  

Having said that, it is recommended that you should take investment decisions once the stock breaks the downward sloping trendline on weekly charts. Till then keep this stock on your wish list to monitor. When the stock breaches this trendline, it likely would be a trend reversal. Remember, whenever the stock gives a breakout, do not enter unless you validate the same. This will help you avoid any false breakouts.  

Mahindra and Mahindra Financial today opened at 199.3 making a high and low of 200.5 and 194.05, respectively before closing at 195.55.