Modulex Construction Technologies Ltd. Based on Rectangle Patter

21 nov. 2024

1. Pattern Analysis
- Rectangle Pattern:
- Timeframe: 5 Years
- Description: The stock has formed a rectangle pattern, with a well-defined resistance at ₹24 and support at ₹8. This long-term consolidation suggests significant accumulation and potential for a substantial breakout.
- The breakout above ₹24 signals a shift in sentiment, with the potential to transition into a strong bullish phase.

2. Volume Analysis
- Volume Behavior:
- Volume remained subdued during the consolidation phase, characteristic of accumulation within a rectangle pattern.
- A surge in volume accompanying the breakout above ₹24 confirms strong buying interest and validates the breakout.

3. Price Action Analysis
- Resistance Levels:
- ₹24: The breakout level and key resistance.
- ₹30–₹35: Immediate upside target zone based on the rectangle pattern projection.
- Support Levels:
- ₹18–₹20: Likely pullback or retest area post-breakout.
- ₹8: The lower boundary of the rectangle and a critical long-term support level.

- Candlestick Behavior:
- The breakout is marked by a strong bullish candlestick with a close near its high, indicating strong momentum.
- Higher highs and higher lows in recent sessions confirm the bullish trend.

4. Validation of Bullish Signal
- The breakout above ₹24 is supported by significant volume, affirming the credibility of the move.
- The long 5-year consolidation adds robustness to the breakout, as longer patterns tend to yield stronger trends.

5. Target Setting
- Rectangle Pattern Target:
- Height of the rectangle = ₹24 - ₹8 = ₹16.
- Target = ₹24 + ₹16 = ₹40.

- Incremental Targets:
- Target 1: ₹30 (+25% from ₹24).
- Target 2: ₹40 (+66% from ₹24).

6. Entry and Stop Loss
- Entry Levels:
- Primary Entry: Above ₹24 after confirmation of the breakout.
- Pullback Entry: Near ₹18–₹20 if the stock retests the breakout level.
- Stop Loss:
- Place a stop loss at ₹18, below the retest zone.

7. Trade Setup Summary
- Entry Levels:
- Above ₹24 for breakout traders.
- Near ₹18–₹20 for pullback traders.
- Targets:
- Target 1: ₹30 (+25%).
- Target 2: ₹40 (+66%).
- Stop Loss: ₹18.

8. Final Notes
Modulex Construction Technologies Ltd. has confirmed a breakout from a long-term rectangle pattern, with a strong surge in volume supporting the move. This breakout indicates a shift in sentiment, making the stock attractive for momentum and swing traders. Monitoring the retest zone around ₹18–₹20 is recommended for optimal entry.