Chart Check: Should you buy this household appliance stock that hit fresh record highs?

economictimes.indiatimes.com:

V-Guard Industries, part of the household appliance sector, has rallied by more than 12% in June 2023 to hit a fresh record high, and the chart pattern suggests that the rally may not be over. The stock recently gave a breakout from an Inverted Head & Shoulder pattern as well as a swing high of Rs 281 recorded on 1st June 2021. The stock closed at Rs 285 on 30th June 2023.

The stock rose from Rs 251 as on 31st May 2023 to Rs 282 recorded on 30th June which translates into an upside of 12.3%. The stock hit a record high of Rs 290.90 on 28th June 2023. The stock rose more than 5% in a week.

The momentum has pushed the stock into an overbought zone which could lead to some consolidation. 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 which is a positive sign for the bulls. The daily Relative Strength Index (RSI) is at 80.4.

RSI above 80 is considered strongly 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.

“The stock of V Guard has undergone a notable correction, characterised by the absence of a pattern of lower highs and lower lows since reaching its peak in late October 2019,” Omkar Patil, Technical Research Associate at GEPL Capital, said. “This indicates a well-executed correction and the establishment of a robust foundation over the past four years. The stock of V Guard has the potential for an upward trajectory after successfully navigating the correction phase,” he said.