October 10, 2024

Housing Finance Development

It's Your Housing Finance Development

Chart Check: This housing finance stock gives breakout from a falling wedge pattern; time to buy?

Chart Check: This housing finance stock gives breakout from a falling wedge pattern; time to buy?

Housing Development Finance Corporation (HDFC), part of the housing finance space, gives a breakout from a falling wedge pattern on the daily charts which could take the stock towards Rs 2,800 level.

Short-term traders can look to buy the stock now or on marginal dips for a possible target of Rs 2,820 in the next 3-4 weeks, suggest experts.

The stock hit a 52-week high of Rs 2,867 on 4th May 2023 but it failed to hold on to the momentum. The stock found support above the 200-EMA in June 2023 before bouncing back.

The momentum helped the stock to reclaim 50-EMA as well last week. The momentum also helped the stock to break out from a falling wedge pattern on the daily charts which is a bullish sign.

Wedges are triangle patterns that are pointing upward or downward. A triangle pattern that points downwards, i.e. a falling wedge, is called a bullish wedge. A breakout from the upper trendline of the pattern suggests that bulls are here to stay. Also ReadIn terms of price action, the stock is trading well above most of the short and long-term moving averages such as 5,10,30,50,100, and 200-DMA on the daily charts.

image (76)ET CONTRIBUTORS

“HDFC stock price has formed a strong base near Rs 2,650 zones and gave a falling wedge breakout on the daily scale after 23 sessions. It has also negated lower highs formation after five weeks and formed a strong bullish candle with noticeable volumes,” Arpit Beriwal, Analyst, Equity Derivatives & Technicals, MOFSL, said.

“It managed to surpass its 50-DEMA on the daily scale and momentum indicator (RSI) has given a trend line breakout on a daily scale which suggests good momentum is likely to continue in coming sessions,” he said.

The daily Relative Strength Index (RSI) is placed at 57.5. RSI below 30 is considered oversold and above 70 is considered overbought, Trendlyne data showed.

“Good buying interest is visible in the financial space and the risk-to-reward ratio is quite favourable at the current juncture,” highlighted Beriwal.

“Thus looking at the overall chart structure we expect the stock to move northwards in coming sessions towards Rs 2,820 zones with keeping stop loss below Rs 2,640 levels on a closing basis,” he recommends.

(Disclaimer: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of the Economic Times)

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