This stock broke out from a falling wedge pattern with a 5843 per cent surge in volume; do you own it?

This petrochemical company breaks out of its falling wedge pattern on daily charts with a massive 5843 per cent increase in volume. Continue reading to learn more about this stock.

Despite market volatility, with the Nifty 50 down roughly 0.8 per cent and Nifty Mid-Cap 100 and Nifty Small-Cap 100 indices down more than 1 per cent, one company has remained in the spotlight which is Bhansali Engineering Polymers Ltd. It is a petrochemical firm with a market value of Rs 2,110 crore that manufactures acrylonitrile butadiene styrene (ABS) resins and styrene acrylonitrile resins (SAN).

Yesterday, the stock began to draw investor interest from the start of the session, resulting in a 12.8 per cent increase to Rs 121.65 at the close. This, in turn, resulted in a breakout from the falling wedge pattern on the daily chart, indicating a positive advance ahead.

This pattern appears when a stock has been under selling pressure for an extended period and is going into lower lows and lower highs pattern. The entire price action resembles a triangle when the peaks and troughs of this downtrend are connected by a trendline. This is not a triangle, though, because both trendlines are heading downward, which is not the case with a conventional triangle pattern.

Image: Daily chart of Bhansali Engineering Polymers Ltd.

These are often reversal patterns, and a breakout over the falling trendline resistance indicates a change from the previous downtrend to an uptrend. Furthermore, on the NSE yesterday, volume reached a record high of 95.1 lakh shares. This is 5843 per cent more than the 50-day average volume of 3.6 lakh shares, significantly increasing the breakout's likelihood.

Yesterday, the stock resisted at Rs 122.65, which is also a major Fibonacci milestone (61.8 per cent). Today, however, the price cleared the 61.8 per cent Fibonacci threshold, gaining over 4 per cent in a market that is sinking. Even so, the volume was about 37.4 lakh shares. However, there is a strong resistance around Rs 129.25 and support at Rs 122.65 on the downside.