Eternal Ltd Forms A Rectangular Channel Pattern Indicating A Bullish Breakout

Synopsis: Eternal Ltd has formed a rectangular channel on the 4-hour chart, and an upside breakout indicates a bullish bias.

The Eternal Ltd, following a phase of sideways consolidation in recent sessions, has developed a rectangular channel pattern. From the above chart, the stock has clearly broken above the key resistance level near Rs 265.

On Wednesday, the stock reached a higher high and broke above the key resistance level of Rs 265 and ended the session at Rs 280 in 4-hour chart time frame The move was backed by a sharp rise in volumes, signalling the emergence of near-term bullish momentum.

For a rectangular channel, the price target is estimated by adding the height of the prior range to the breakout level or by identifying the next resistance zones. Traders use this projection to set profit targets and often book partial or full gains as prices near these levels.

Eternal Ltd Chart: 4-hour Timeframe

Indicator Confirmation

• RSI: The daily RSI indicates bullish momentum, as it rose from 60.47 in the previous trading session to 69.32, which is almost entering the overbought zone.
• 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 EMA was above the 9-day EMA, further confirming a bullish trend.
• Price Volume Trend: The Price Volume Indicator confirmed the uptrend, supported by a sharp increase in buying volumes in the daily timeframe.
• On-Balance Volume: The rising OBV and rising price confirm that the trend is a strong, sustainable upward trend driven by high buying pressure. 

Implications

A breakout from the rectangular channel signals possible upside. Sustained closes above Rs 265 with rising buying interest would confirm strength and reduce the risk of a false breakout. This level, now acting as support, is key to maintaining near-term bullish momentum.

About the stock

Eternal Limited (formerly known as Zomato Limited) is an Indian public limited company that operates prominent digital e-commerce platforms. The company manages four key business segments: online food ordering and delivery (Zomato), quick commerce marketplace delivery (Blinkit), going-out ticketing and discovery experiences (District), and B2B restaurant supplies (Hyperpure).

Over the past year, Eternal Ltd delivered a 7.28% return, driven largely by a 12.86% surge in the last month, which managed to offset a marginal 1.34% decline over the six-month period. For more such technical stock ideas, Click hereto view our research page.

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