Synopsis: Godfrey Phillips India Ltd has formed an inverted head and shoulders pattern on the 4-hour chart, indicating a potential near-term bullish reversal.
The inverted head and shoulders pattern shows sellers losing strength and buyers gaining control, signalling a potential bullish reversal. The inverted head and shoulders pattern consists of three lows, with the middle low (head) deeper than the two higher lows (shoulders). A breakout above the neckline indicates a possible bullish reversal.
On Wednesday, Godfrey Phillips India Ltd broke above the neckline of an inverted head and shoulders pattern on the 4-hour chart. After the breakout, the stock surged 10%. A sustained move above Rs 2,250 could lead to further upside, while a fall below this level may weaken the bullish outlook.
For an inverted head and shoulders, targets are placed at nearby resistance or by adding the head-to-neckline height above the breakout. Traders trail profits and monitor volume and momentum for confirmation.
Godfrey Phillips India Ltd Chart: 4-hour Timeframe
Indicator Confirmation
- RSI: The daily RSI indicates bullish momentum, as it rose from 44 in the previous trading session to 65 on Wednesday, confirming the bullish reversal.
- MACD: On the daily time frame, the blue MACD line was above the orange signal line, with the histogram turning green, indicating bullish momentum.
- Moving Averages: On the daily time frame, the 5-day moving average has crossed above the 9-day moving average, further confirming a bullish trend.
- Price Volume Trend: The Price Volume Indicator confirms the uptrend, accompanied by a sharp increase in buying volume in the daily time frame.
Implications
The inverted head and shoulders pattern signals potential upside. Sustaining above Rs 2,250 support, supported by strong volumes, would strengthen near-term bullish momentum.
About the stock
Godfrey Phillips India Limited (GPIL) is a flagship FMCG company of the KK Modi Group. Primarily focused on tobacco and confectionery, it operates in 35+ countries. GPIL manufactures and distributes Marlboro cigarettes in India through a partnership with Philip Morris International.
Over the past month, Godfrey Phillips India Ltd has risen 13.05%. However, over the last six months, the stock has fallen 22.94%, though it remains up 8.68% year-on-year.
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