Chart Check: After 100% rally in 6 months, breakout from bullish flag pattern makes this IT firm a top buy
Zensar Technologies, part of the IT sector, has more than doubled investors’ wealth in the last 6 months to hit a fresh 52-week high in July 2023 and the chart structure suggests that the rally may not be over yet. The stock rose from Rs 216 recorded on January 17th, 2023, to Rs 438 as on July 17th, 2023, which translates into an upside or a rally of 102% in the last 6 months. The recent rally pushed the stock to a fresh 52-week high of Rs 445 recorded on 17th July 2023.
It has rallied more than 10% in a week, and over 60% in the last 3 months. The stock also gave a breakout from a Flag pattern on the weekly charts which has opened room for the stock to head towards 500 levels, suggest experts. Bullish flag patterns are formed in stock with strong uptrends.
The pole is formed from the vertical rise seen in the stock price while the flag resembles the period of consolidation. A breakout from the flag on the higher side results in a strong continuation of the upmove. The neckline of the breakout was placed at Rs 400 level which will now become crucial support for the stock.
The price action has pushed the stock into an overbought zone; hence, some consolidation in the stock price cannot be ruled out. The daily relative strength index (RSI) is at 75.4. RSI above 70 is considered overbought.
This implies that the stock may show a pullback. MACD is above its center and signal line, this is a bullish indicator, Trendlyne data showed. In terms of price action, the stock is now trading above most of the crucial short and long-term moving averages of 5,10,30,50,100 and 200-DMA on the daily charts which is a positive sign for the bulls.
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