TECHNICAL OPPORTUNITY

HDFC Life Insurance Company Ltd.

The stock was in an uptrend during 2019 where it topped around 646 levels in October 2019 and from there on it went into consolidation and made a low of 340 in March 2020. Now it seems that the consolidation is over as the stock has given a fresh breakout from the neckline of the inverse head & shoulder pattern.

Generally, the head and shoulder pattern is considered to be a reversal pattern but in this case, it appears as a continuation pattern (see chart 1.1 below).

1.1 Daily Chart
1.2 Daily Chart

From the chart above (1.2), it is evident that the stock has given a decisive breakout with increased volumes from the neckline of the inverse head & shoulder pattern which is considered as one of the most reliable chart patterns.

Another chart attached below (1.3) shows the ADX indicator which measures the strength of the trend. ADX above 30 indicates that the trend is strong with positive DMI well above negative DMI.

1.3 Daily Chart

For the weekly trend to change, the stock has to decisively close above the neckline on a weekly closing basis.

If this pattern plays out as per the expectation then we can see a major up-move in the coming weeks.

Thank you for reading. Stay safe.