Triple Top Pattern Indicates Potential Trend Reversal for Consumer Discretionary Stock

Synopsis: Nykaa Ltd has formed a triple top pattern on its 4-hour chart, indicating potential exhaustion near resistance and signalling a possible near-term bearish reversal 

Nykaa Ltd, after a sustained upward move in recent trading sessions, has formed a triple top pattern on the 4-hour time frame, signalling possible trend exhaustion and a potential bearish reversal

The triple top is a classic bearish reversal pattern, characterised by three peaks formed at roughly the same price level, separated by moderate pullbacks. This formation indicates that buying momentum is weakening and signals a potential shift from an uptrend to a downtrend once the price breaks below the support level.

On Thursday, the stock broke below the Rs 240 support neckline after forming a triple top pattern. This breakout, supported by sustained selling volumes, confirms near-term bearish momentum.

For a triple top pattern in Nykaa Ltd, the immediate downside targets are typically the nearest support levels below the neckline. Once the price breaks below this support, these levels often act as initial objectives, where traders may look to book profits or reassess positions.

(4-hour Timeframe)

Indicator Confirmation

RSI: The daily RSI indicates bearish momentum, as it fell from 31 in the previous trading session to 29 on Thursday, confirming the continuation of the trend.

MACD: The orange signal line crossed above the blue MACD line, with the histogram turning red, indicating bearish momentum.

Moving Averages: On the 4-hour time frame, the 5-day moving average has crossed below the 9-day moving average, further confirming a bearish trend.

Price Volume Trend: The Price Volume Indicator confirms the trend, supported by a sharp decline in buying volume.

Implications

This triple top formation in Nykaa Ltd suggests the potential for near-term downside pressure. A decisive close below the neckline support, ideally accompanied by higher volumes, is required to confirm the bearish reversal and reduce the risk of a false breakdown. 

About the stock

Nykaa, founded in 2012 as a digital-first beauty company, has grown into a leading consumer-focused platform offering beauty, fashion, and B2B solutions, serving over 49 million customers through online and 265 offline stores. With a strong house of brands and global partnerships, Nykaa combines innovation, authenticity, and omnichannel reach to deliver a seamless and inspiring shopping experience.

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