Chart Pattern Analysis:
1) Bullish Cup & Handle Pattern:
The cup and handle pattern is a bullish continuation pattern. To validate this pattern, traders should look at the following checklist:
- Prior trend: As it is a continuation pattern, the price should have a prior bullish trend.
- Length & Depth: Normally, a “U” shape longer cup provides a more accurate bottom than a “V” shaped cup. Price has formed 41-week-old cup, which is not too deep. The cup should not retrace more than 61.8% of the depth of the last swing. The general depth of the cup is 50% of the previous move.
- Handle: We should not trade deep handles. It suggests weak demand pressure. The handle should not retrace more than 1/3 or 50% of the cup. In this security, the price retraced 50% of the cup.
- Volume: Volume decreases during the decline and surges after the breakout.
- Breakout, target, and stop-loss: Breakout will confirm when the price will break out the neckline resistance with good volume only. The target of a trade can be determined by the cup’s depth. There are two stop-loss points: (i) low of handle (ii) middle point of the handle
- Failure: Failure will result in a double top reversal pattern.
2) Consolidation Box/Value Area:
NSE KPITTECH has found a consolidation box on the daily timeframe chart. Price took support from the control line as moving toward the upper band of the channel. The upper line indicates resistance, so a resistance breakout increases demand pressure. After retracement, if the price sustains above the upper band of the channel, traders can set their targets up to 940. It’s better to trade after a pullback because the price may face resistance near an all-time high.