Godrej Industries - Technical Update

Godrej Industries had been oscillating within the context of the triangle since July 2013.

April 02, 2014 5:00 IST | India Infoline News Service
CMP Rs312, Target Rs375, Upside 20.2%

Symmetrical Triangle breakout

On the weekly chart, the stock has broken out from a symmetrical triangle pattern and currently has found support above the falling trendline of the triangle. Godrej Industries had been oscillating within the context of the triangle since July 2013. Volumes diminished as the stock moved within the triangle. However, in last few weeks, volumes have increased as the price moved above the apex of the pattern.

Convergence of 100-WMA and Triangle

Support for the stock is placed at Rs280 i.e. Point of convergence of above mentioned Symmetrical Triangle and 100-WMA. The stock has been moving along with the support of its 100-WMA since 2010.

Continuation of the long-term trend

The upside breakout seen last week has led to continuation of the long term primary uptrend that is in place since January 2012. Last week’s rally of ~7% has also led to a break past its previous peak of Rs310. Given that the long-term uptrend is still intact, we expect this breakout to act as a primary trend continuation. RSI has successfully negated triple top pattern which suggests further upside from the current levels.

Inverted head & shoulders breakout

As Godrej Industries has also broken above the neckline of an Inverted head & shoulders pattern within the triangle with ease, probability of further extension of the rally remains buoyant.

Long awaited consolidation in Godrej Industries has finally come to an end after stock continued its upward march, leading to a breakout from triangle pattern. Based on price-pattern analysis, we recommend a BUY with stop loss of Rs280 for a target of Rs375.

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