Tata Motors reaches brink of bullish pennant breakout

The stock of Tata Motors rose by 2.44 per cent on Monday along with a greater volume as compared to its prior session.   

The stock has gained nearly 118 per cent from the lows of December 22 to the 52-week high, which was registered on February 4, 2021. Thereafter, the stock has been consolidating within a narrowing range over the last couple of weeks. This consolidation has been taken from what many D-Street chart watchers call a ‘pennant’ pattern. It is defined by a declining trendline at the top of the range along with a rising trendline at the bottom. This pattern is viewed as a continuation pattern, which means that they tend to be resolved in the direction of the trend that preceded them. Currently, the stock is on a verge of resolving out of this continuation pattern.   

The stock is trading above all its short and long-term moving averages. It is trading at 11.50 per cent above the 20-DMA and 41.87 per cent above the 50-DMA. All the moving averages are trending upside, and they are in the desired sequence.  

The RSI is above the 70-mark for the last one month. The stock is clearly in an uptrend while the trend strength is extremely high. The average directional index (ADX), which shows the strength of the trend is as high as 53.12 on a daily chart. Directional indicators continue in the buy mode as +DMI is much above the –DMI. Besides, the Elder Impulse System (EIS) has given a bullish sign. In short, the stock is on the verge of a bullish breakout.