Chart Check: Breakout from descending triangle pattern makes this stock an attractive buy; new record highs possible

The stock price of Balkrishna Industries, part of the tyre & rubber product industry, witnessed a breakout from a descending triangle pattern on the upside which has opened room for the stock to head towards Rs 3,000 levels in the medium term, suggest experts.

The stock hit a 52-week high of Rs 2,525 on 21st June 2023. The all-time high is placed at Rs 2,724 recorded on 23rd September 2021.

The stock has been consolidating in the last 1 month but has rallied by about 20% in the last 3 months. The stock is holding well above crucial moving averages.


In terms of price action, the stock is trading well above most of the crucial short- and long-term moving averages on the daily charts such as 5,10,30,50, and 200-DMA.

The daily Relative Strength Index (RSI) is at 58.3. RSI below 30 is considered oversold and above 70 is considered overbought, Trendlyne data showed. MACD is above its center and signal line, this is a bullish indicator.

"Balkrishna Industries stock price has given a descending triangle pattern breakout on the upside on the monthly chart, indicating that the stock is resuming its trend from sideways to an uptrend with strong volumes," Suraj Bathija, Founder & CSO at AlgoBulls, said.

“Since April 2010, the ADX, which measures trend strength, has been above the 20 threshold level and has never fallen below it. Similarly, the RSI has never dropped below 40 since 2010. Instead, it always resumed its uptrend after passing through the 40–43 zone,” he highlighted.

On the weekly chart, the stock has retraced back to its breakout and resumed its upward movement, so we can consider the breakout zone to be strong support. ADX is also increasing and is now above 20. The RSI is increasing and is now above 60.

“On the daily chart, the ADX from 23 to 28 has also risen in recent days, indicating that the trend is strengthening. Green candles are larger in size than red candles, indicating that buyers outnumber sellers,” added Bathija.

“The stock can be purchased at CMP Rs 2,462 with a stop loss of Rs 2,125 and targets of Rs 3,220 and Rs 4,125 in the coming 4 to 6 months,” he recommends.

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