Technical inspection: More than 140% in 2021! This software company forms a Diamond pattern which makes it an attractive buy

Intellect Design Ltd has risen 140% so far in 2021, compared to the 23% rise seen in the Nifty50 during the same period, and the trend still appears to be up after the recent breakout.

What is the escape phase?
A breakout is a phase where the share price moves outside of a consolidation with increased volumes. Such breakouts usually lead to good short-term price movement.

Stock performance
The stock with a market cap of over Rs 10,000 cr hit a new 52-week high of Rs 892 on July 26, and since then it has consolidated in a range.

Intellect Design Arena creates financial technologies that help banks drive businesses to growth and success. It is a leading financial platform for corporate banking, retail banking, brokerage solution, treasury management and insurance software.

The stock hit a low of Rs 577 on August 23, then rebounded. This stock has recently seen a consolidation phase and a breakout of a “diamond” pattern on the daily chart can be seen which will add momentum to the stock.

“Stock prices gave a breakout at the end of the resistance of a diamond pattern, which is a positive sign. Additionally, the volumes break was above its recent daily average so we could see an uptrend in this headline in the short term, ”said Ruchit Jain, Lead Research, 5paisa.com.

Diamond pattern
A diamond pattern is used to detect reversals following a downtrend. The stock fell more than 30% from the recent high of Rs 892 before reversing losses.

This pattern usually forms after a brief rally that took the stock to a high point in November, followed by a observed decline in the stock that took it to the Rs 603 levels recorded on November 29. The stock is peaking again pushing it out of the breakout range.

Technically, the stock is trading well above the short and long term trading ideas of 30, 50, 100 and the 200 day moving average, which is a positive sign for the bulls.

“By following the momentum of the stock after the breakout, traders can look to trade with a positive bias and buy in the range of Rs.720-715 for potential targets of Rs. 790. You can place a stop loss. below Rs. 680 in long positions, ”Jain said.

(Disclaimer: The views / suggestions / advice expressed here in this article are solely by investment experts. Zee Business suggests that its readers consult their investment advisers before making a financial decision.)