Chart Check: Hero MotoCorp breaks out from inverse head & shoulder pattern; here’s how to trade the stock

Hero MotoCorp, part of the 2-3 wheeler industry, recorded a breakout from an inverse head & shoulder pattern on the daily charts which has opened room for the stock to head towards Rs 2,700 level, suggest experts.

The 2-3 wheeler stock hit a 52-week high of Rs 2,939 on 18th August 2022 but it failed to hold on to the momentum. The stock finally took support at Rs 2,246 on 28 March 2023 before bouncing back.

The momentum helped the stock to head towards Rs 2,500 level where it faced some resistance again and corrected towards Rs 2,400 level for the second time in April 2023.


The price action formed an inverse head & shoulder pattern on the daily charts. The neckline of the breakout was placed at Rs 2,466-2,500 level. The stock closed at Rs 2,545 on 5 May 2023.

An inverse head & shoulder pattern is a reversal pattern. It is defined as three bottoms with the middle bottom (head – has the maximum drawdown) significantly lower than the other two bottoms (left and right shoulders). Also Read

The Relative Strength Index (RSI) is placed at 62.6. 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.

In terms of price action, the stock is trading above short-term moving averages such as 5,10,30,50 while it is still trading below the 200-DMA.

“After making the bottom of Rs 2,100 last year behind some corporate news, we have seen Hero MotoCorp make the top Rs 2,938. Despite the market performance, traders and investors witnessed a 24% price correction from October 2022 to March 2023 across Auto sectors,” Kiran Jani CIRA, Head of Technical Research at Jainam Broking, said.

“Recently, the stock price has made a low of Rs 2,246 which is above the previous panic low price. Since March 2023 we are seeing prices have started moving up in a higher top/higher bottom pattern,” he said.

“At the current juncture, we can see a bullish price pattern breakout with volume visible on the chart. The price has formed an inverted head and shoulder. Also with that, it has given a close above the SMA-50,” highlighted Jani.

“Relative strength index (RSI-14) is showing strength and trading into a bullish zone. Considering the current chart pattern, we are expecting prices to touch Rs 2,720 in the next 3-4 weeks if prices hold Rs 2,400 levels which can be the stop loss,” he recommends.

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