Synopsis: Power Finance Corporation Ltd has formed a rectangular channel pattern on the 4-hour chart, with an upside breakout indicating a bullish bias.
Power Finance Corporation Ltd, after a phase of sideways consolidation in recent sessions, has formed a rectangular channel pattern on its 4-hour chart. The rectangular channel pattern represents a consolidation phase where price oscillates between parallel support and resistance levels. A decisive breakout above the resistance neckline signals a bullish continuation, indicating that buyers have gained control, and upside momentum may accelerate.
On Wednesday, the stock formed a higher high and broke above the key resistance level of Rs 427. The breakout, coupled with a sharp rise in buying volumes, signals the emergence of near-term bullish momentum.
For a rectangular channel pattern, the upside target is calculated by measuring the height of the consolidation range and projecting that distance upward from the breakout point, or targets are set at immediate resistance. Traders typically use this projection to set profit targets, often booking partial or full gains near the target.
Power Finance Corporation Ltd Chart: (4-hour Time frame)
Indicator Confirmation
- RSI: The daily RSI indicates bullish momentum, as it rose from 50.64 in the previous trading session to 61.14 on Wednesday.
- MACD: On the daily time frame, the orange signal line crossed below the blue MACD line, with the histogram turning green, indicating bullish momentum.
- Moving Averages: On the daily time frame, the 5-day moving average has crossed above the 9-day moving average, further confirming a bullish trend.
- Price Volume Trend: The Price Volume Indicator confirmed the uptrend, supported by a sharp increase in buying volumes.
Implications
The breakout from the rectangular channel indicates scope for further upside. A sustained close above the key Rs 427 support level, preferably accompanied by increased buying volume, would confirm the validity of the breakout and reduce the risk of a false signal. The former resistance around Rs 427 has now turned into immediate support, and continued trading above this level would reinforce bullish control in the near term.
About the stock
Power Finance Corporation Ltd. (PFC) is a Maharatna PSU and India’s largest NBFC group. Majority-owned by the Government of India, it is the nation’s leading renewable energy financier and highest profit-making NBFC. Incorporated in 1986, PFC provides critical funding for power and infrastructure projects.
Over the past month, Power Finance Corporation Ltd has gained 2.8%. The stock is up 5.93% over the last six months and has registered a 7.54% gain over the past year. For more such technical stock ideas, Click here to view our research page.
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