Mahindra and Mahindra Financial on the verge of a trendline breakout!

Mahindra and Mahindra Financial is near its three-year down trendline. Is it on a verge of giving a breakout? Let’s find out.

Mahindra and Mahindra Financial made an all-time high in the month of April 2018. And ever since then, it is moving downwards forming lower highs and lower lows. In March 2020, it further exceeded its pace of fall and made a low of 76.1 in May 2020. Post this fall, as there was overall optimism in the market, even this stock started rising. However, in February 2021, it faced resistance on its three-year falling trendline. The stock faced further selling pressure leading it towards creating a higher low of 138 in August 2021. From here it again started to inch upwards and as of today, it is again trading near its three-year trendline that is heading downwards. Interestingly, this is near the crucial Fibonacci level of 50% (198 levels).

Moreover, the stock is presently trading above its 50-Day Exponential Moving Average (EMA). Its Relative Strength Index (RSI) is trading at 63.85 which is above its 20-Day EMA of 54.62 on weekly charts. Moving Average Convergence Divergence (MACD) is in the positive territory and is trading above its signal line. MACD also had a positive crossover near the neutral line, supporting the up move.

The stock is currently trading above its Parabolic SAR. In fact, for the past nine weeks, it is trading above its Parabolic SAR. This too supports the recent up move. Speaking about Commodity Channel Index (CCI) it is presently trading below the 100 level at 93.06. This means, as per CCI and also RSI, the stock has not yet entered the overbought situation to witness selling pressure. On the contrary, the stock is presently trading near the upper band of the Bollinger band suggesting a pullback.

All in all, it is recommended that you should take investment decision after the stock breaches the downward sloping trendline on weekly charts. Till then we recommend you keep this stock on your radar and monitor. The day it breaks out from this trendline, the stock is likely to head for a trend reversal. However, even after the stock gives a breakout, it makes sense to validate the same in order to avoid false breakouts.