This stock breaks out from the falling wedge pattern and jumps 6 per cent with higher volumes

While the markets are trading in red this stock jumps over 6 per cent giving a breakout from the falling wedge pattern with increased volumes. Should you invest? Let’s find out.

Despite the market downturn, the share price of Mahindra Lifespace Developers Ltd is creating a stir. In the morning trading, the stock rose more than 6% to Rs 369, completing a breakout from the Falling Wedge pattern on the daily chart.

For a long period, the stock had been trending downward as supply had surpassed demand. As bears gained control, the share price continued to make lower lows and lower highs, displaying a steady drop that was bordered by two falling trendlines. Profit booking occurred every time the stock attempted to break through the upper trendline resistance, while a tide of buyers arrived at the lower trendline support.

This complete price action resulted in the construction of a falling wedge pattern, which resembles but is not the same as a triangle pattern. The main distinction is in the direction of both trendlines that contain the price action. A falling wedge formation has both of them facing down, although a triangle pattern never does.

Today, Mahindra Lifespace Developers Ltd shares are showing tremendous power after breaking over the wedge pattern's trendline resistance. This breakthrough suggests a possible turnaround from here, and the stock's direction may soon shift to the upside. So far in today's session, the volume has been over 16.5 lakh shares, which is already 930% greater than the 50-day average volume of 1.6 lakh shares, and it's only the first half of the day. As a result, the volume supporting today's rise increases the likelihood of an imminent upward move.

Because the previous downturn had been very persistent, a successful reversal may result in a good rise for the stock. Traders should keep a watch on the nearest resistance level, which is around Rs 395.

If this barrier is breached, the next obstacle is Rs 446 in the medium term and rs 415 in the short term. This stock's closest low of Rs 343 might serve as a support level.