How to identify the breakout stocks like IRFC, HUDCO, and IREDA using Technical Analysis

A tried-and-true method that combines technical analysis, sectoral trends, and risk management can help you identify prospective winners.

A sharp eye, strategic analysis, and a firm grasp of market dynamics are necessary in the dynamic world of stock trading to spot and seize blockbuster stocks. Technical and fundamental analysis are frequently used in tandem by profitable traders to increase their chances of winning big. We provide a tried-and-true method in this post that has helped many astute investors achieve remarkable returns.

Stocks rising by at least 50 per cent in less than 8 weeks

This strategy's initial step is to exclude stocks that have had an extraordinary increase of 50 per cent to 70 per cent or more in less than 8 weeks. This quick price rise suggests that there is tremendous momentum and room for more increases. These top-performing stocks may be found by investors using a variety of screeners and tools, paving the way for more research.

Green candle volume is higher than red candle volume.

Volume analysis is essential for determining how strong a stock's trend is. Making sure that the volume on green days is noticeably higher than the volume on red days is the second requirement. This suggests a robust and long-lasting upswing propelled by high purchasing interest. High volume during rising trends indicates investor conviction, which increases the chance of further price growth.

Base formation, including flat, VCP, etc.

The third phase involves waiting for the creation of a strong base with patience once possible candidates have been identified. Among various shapes, this might be a flat base or a VCP (Volatility Contraction Pattern). When the stock is ready for a breakout, these base formations serve as a springboard for the subsequent leg upward, giving traders a place to enter the market.

To gain an extra edge, look into industries that are trending (PSU banks, Solar Stocks)

It is imperative that stock selections be in line with trending industries in order to maximise the likelihood of success. Another benefit is that investing in industries with significant momentum, such PSU banks or solar companies, may be monitored. The stock's individual strength is enhanced by this sectoral alignment, raising the possibility of large gains.

Maximum 7-8 per cent Stoploss at Entry

It is essential to approach the trade with discipline. Using a maximum stop loss of 7-8% can assist control risk and safeguard cash. This cautious strategy preserves funds for potential future gains by enabling quick exits in the event that the deal doesn't go as planned.

For the most part, the stock should have remained above the 20 EMA

The 20-day exponential moving average is a crucial technical indicator in this approach (EMA). The fact that the stock has primarily continued above this average confirms the uptrend and indicates that the bullish momentum is continuing.

Finally, the approach takes advantage of the overall state of the market. In bull markets, a year's worth of gains may be compressed into a few months with the right stock selection. Keeping an eye on market changes and modifying the plan as necessary is essential to optimising profits.

Indian Railway Finance Corp. Ltd

Indian Renewable Energy Development Agency Ltd

Housing & Urban Development Corp. Ltd

It is noteworthy that several stocks that have prospered under this approach have also reported strong profits. Robust fundamentals frequently act as a trigger for long-term upward momentum, confirming the possibility of blockbuster returns.

A methodical strategy that incorporates technical analysis, sectoral knowledge, and risk management is needed to identify blockbuster stocks. Investors may put themselves in a position to spot and profit from the next major stock market winners by following these procedures. Recall that the secret to success is a combination of discipline and patience.

Disclaimer: The article is for informational purposes only and not investment advice.