Chart Check: Coforge breaks out from inverse Head & Shoulder pattern to hit record high; should you buy?
Coforge Ltd, part of the IT industry, breaks out from an inverted Head & Shoulder pattern on the weekly charts which has opened room for the stock to head towards 7000 levels, suggest experts.
The stock rose by about 10% in a week which helped the stock to break out from an Inverse Head & Shoulder pattern on the weekly charts. The neckline of the pattern was placed around 6100 levels.
After breaching the neckline of the inverse head & shoulder pattern earlier in December placed at 6100 levels the stock hit a fresh record high of Rs 6528 on 19th December 2023.
The stock has been in an uptrend after hitting a low above 4700 levels in October 2023.
Recently, the stock broke out from a consolidation range on the weekly charts which also added to the momentum.
The IT stock rose in a rage since November-December on the weekly charts where 5900 acted as a strong resistance and on the downside 5500 acted as a crucial support.
In terms of price action, the stock is trading well above most of the crucial short- and long-term moving averages such as 5,10,30,50,100 and 200-DMA on the daily charts.
The daily Relative Strength Index (RSI) is at 82.8. RSI above 80 is considered strongly overbought.
This implies that stock may show a pullback. The daily MACD is above its center and signal Line, this is a bullish indicator.
“Coforge is displaying a robust price structure, marked by consistent higher highs and higher lows, currently reaching all-time highs, signaling strong momentum,” says Vidnyan S.
