Technical Stock Pick: Down 10% from highs! This hospital stock forms a Flag pattern on daily charts; time to buy?
economictimes.indiatimes.comNarayana Hrudayalaya Ltd, part of the hospital sector, has fallen by about 10% from its record high and is consolidating in a narrow range forming a Flag-like pattern on the daily charts.
The stock is on the verge of a breakout from a Flag pattern. Hence, short-term traders can look to buy the stock for a retest of its record high and a possible move towards 1500 levels, suggest experts.
The stock hit a record high of Rs 1314 on 21st November 2023, but it failed to hold on to the momentum.
The stock closed at Rs 1184 on 26th December which translates into a downside of about 10%.
A bullish flag is usually formed in stocks with strong uptrends and is considered a continuation pattern. The pole is formed from the vertical rise seen in the stock price while the flag resembles the period of consolidation.
“Narayana Hrudayalaya stock is retracing for a dip further to extend the bullish rally to the new ATH.
The chart structure is a classic example of how stock consolidates and moves out to break and how previous resistance becomes support,” Lovelesh Sharma, Founder at MarketFeds Analytics LLP, said.
“After the breakout from a rectangle pattern, the stock rallied towards 1300 odd levels and, at present, is undergoing a correction, which is forming a Flag pattern,” he said.
“The flag is a short-term continuation pattern widely traded and observed by traders and short-term investors. This pattern allows entering an upward-trending stock at a reasonably favourable price with lower risk,” explains Sharma.
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 which is a positive sign for the bulls.
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