VBL share forms morning star pattern; Support and resistance levels to watch

Synopsis: Varun Beverages Ltd formed a morning star pattern on the daily chart, signalling a potential near-term bullish reversal.

The Morning Star pattern signals a momentum reversal, as buyers start to regain control after recent weakness, indicating rising buying interest and supporting bullish potential.

The formation of a small-bodied candle between a preceding bearish candle and a subsequent strong bullish candle reflects a shift in sentiment as buyers regain control.

On Tuesday, Varun Beverages Ltd formed a morning star pattern on the daily timeframe near the Rs 457 level. The formation signalled a potential shift in momentum as buyers started regaining control after recent weakness. A sustained move above Rs 457 could support further upside, while a drop below this level would weaken the bullish outlook.

The targets are typically set near the nearest resistance levels above the reversal. Traders may trail profits as price rises, booking partial or full gains around key resistance zones, while monitoring follow-through strength and volume for confirmation or early signs of buying exhaustion.

Implications

The formation of a Morning Star pattern points to potential upside for the stock. A sustained move above the key Rs 457 level, preferably on strong buying volumes, would confirm the reversal and reduce the risk of a false signal. Holding above this level would reinforce near-term bullish momentum.

About the stock

Varun Beverages Ltd (VBL) is a major PepsiCo franchisee, producing and distributing carbonated and non-carbonated beverages, including Pepsi, Mountain Dew, Tropicana, and Aquafina. Operating across 26 Indian states, 6 Union Territories, and several international markets, VBL has partnered with PepsiCo for over three decades, expanding its product portfolio, territories, and distribution network.

Over the past month, Varun Beverages Ltd has dropped 7.65%. The stock is down 10.72% over the past six months and has declined 16.86% compared to the same period last year. For more such technical stock ideas, click here to view our research page.

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