Delta Corp meets the trend template of Mark Minervini
The stock of Delta Corp jumped more than 450 per cent from the March 2020 lows to high of December 2021. After this robust performance, thereafter, the stock entered into a trading range, which led to formation of rectangle formation.
A rectangle is a continuation pattern that forms as a trading range during a pause in the trend. The pattern is characterized by two comparable highs and two comparable lows.
Recently, the stock has witnessed breakout of rectangle consolidation pattern on the weekly chart along with sizable bullish candlestick. Further, this breakout was supported by a robust volume of nearly 3 times of 50-weeks average volume, indicating strong buying interest by market participants. The 50-weeks average volume was 2.55 crore while in the last week the stock has registered a total volume of 6.75 crore.
Interestingly, the stock is meeting the criteria of Mark Minervini’s trend template. It is trading above 40, 30 and 10-weekly averages and all of them are trending up. At the same time, there is a desired sequence. It is also meeting Guppy Multiple Moving Average (GMMA) set up by Daryl Guppy. This structure indicates that the stock is in clear uptrend.
Since the last couple of trading sessions, the stock has outperformed the broader market indices. Also, it has relatively outshined Nifty 500 with a decent margin. The relative strength comparison with Nifty 500 is marking a higher high.
The stock's Relative Strength Index (RSI) has reached its highest value in the last 14-weeks, which is a bullish sign. Also, it has managed to surge above the 60 mark.
The stock is clearly on an uptrend and trend strength is extremely high. The Average Directional Index (ADX), which shows trend strength, is as high as 28.11 on a weekly chart. Generally, above 25 levels are considered as the strong trend. Moreover, the +DMI is above -DMI and ADX and it is inching higher.
Considering the robust technical structure of the stock we believe it is likely to touch new highs. On the downside, the 20-day EMA is likely to provide the cushion in case of any immediate decline. The 20-day EMA is currently placed at Rs 288.5 level.
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