Technical Stock Pick: Breakout from a ‘Flag’ pattern could take Gabriel India to fresh highs; time to buy?

Gabriel India Ltd, part of the auto component space, underwent consolidation after hitting record high in December 2023 which has taken the shape of a Flag pattern on the daily charts.

A clear breakout from the pattern could take the stock to fresh record highs above 440 in the short to medium term, suggest experts.

The stock hit a record high of Rs 440 on 6th December 2023, but it failed to hold on to the momentum. The stock drifted lower to retest 50-DMA on the daily charts and found support above 360 levels.

The stock witnessed a vertical rise from 300 levels from October 2023-December 2023 when it touched the record high. Post December, the stock underwent a brief period of consolidation which resulted in a Flag pattern.

A clear and sustained breakout from 380 levels could take the stock higher towards the record high and beyond, suggest experts.

A bullish flag 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.

“Gabriel India stock follows a sideways correction in a tight channel after the recent run-up from 200-odd levels. The upward momentum is phenomenal on the back of active volume throughout the last half of 2023,” Lovelesh Sharma, Founder at MarketFeds Analytics LLP, said.

“The recent Sideways correction in stock is forming a short-term continuation pattern called a Flag,” he said. The Flag is one of the most traded patterns and is sought after for short to mid-term trading or investing regarding trend following.

“The upside momentum on average is 60% if the pattern confirms certain key characteristics. The ADX, a trend strength indicator, has risen above 25, indicating the strength in the underlying bullish trend is gaining,” highlights Sharma.

The Gabriel India on the weekly chart seems to be well above its short-term 20 MA, mid-term 50 MA, and long-term 200 MA, indicating its upward trend is likely to continue while the recent dip is an opportunity to enter the momentum.

“14 Period RSI, a momentum indicator, is above 50 and its 9 MA is also showing bullish price divergences since late January,” added Sharma.

“We believe as far as Gabriel India is above 355, It can in mid-term test higher levels of 445, it’s all-time high, and beyond that, 520 – 540. The SL for this stock can be kept at 355 on a closing basis,” he recommends.

(Disclaimer: Recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of the Economic Times)

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William Murphy

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