LIC Housing Finance gives trendline breakout

The stock of LIC Housing Finance Limited has formed a bearish engulfing candlestick pattern as of August 31, 2020, and thereafter, witnessed a correction. The correction is halted near the upward sloping trendline support formed by connection swing lows since April 2020 and initiated its northward journey.

Considering the daily timeframe, the stock has given a downward sloping trendline breakout. Along with this trendline breakout, the stock has also managed to close above the upper Bollinger band and started band walk, which is a very bullish sign. Additionally, the stock has formed a sizeable bullish candle on the breakout day, which adds strength to the breakout.

Further, the breakout is supported by a robust volume of more than double of the 50-day average volume, indicating a strong buying interest by the market participants. The 50-day average volume was 46.40 lakh, while today, the stock has witnessed a total volume of 114.18 lakh.

The stock has also managed to close above its crucial 200-day EMA after a span of almost nine months. Interestingly, the leading indicator, 14-period RSI has given an ascending triangle pattern breakout, which is also a bullish sign. The other volume-based indicators like OBV and Money Flow Index are also very strong.

Technically, all the factors are currently aligned in support of the bulls. Hence, we would advise the traders to be with a bullish bias. On the downside, important support for the stock is placed in the zone of Rs 300-Rs 298, and on the upside, immediate resistance is seen at Rs 336.

On Tuesday, the stock of LIC Housing Finance closed at Rs 321.9 per share, surged by 5.78 per cent. The stock opened at Rs 306.35 per share and hit an intraday high of Rs 324 and a low of Rs 303.25 per share on NSE.