Tata Communications Swing Trade – VCP Breakout with Bullish MoveOverview:
Tata Communications (NSE: TATACOMM) recently broke above a key resistance level of INR 2070, confirming a Volatility Contraction Pattern (VCP) breakout. With the current price at INR 2126, this presents an ideal opportunity for swing traders to capitalize on the bullish momentum.
Technical Analysis:
VCP Breakout:
The stock has been forming a classic VCP (Volatility Contraction Pattern) over the last few months, characterized by a series of price contractions with each pullback becoming smaller, indicating diminishing volatility.
The breakout above INR 2070 on high volume confirms the end of the contraction phase, signaling that buyers are now in control, which makes this an ideal entry point for a swing trade.
Moving Averages:
The stock is trading well above its 50-day and 200-day moving averages, which are trending upwards, further supporting the bullish outlook. This indicates the presence of a long-term uptrend and adds to the trade's credibility.
RSI & MACD Indicators:
RSI: Currently at 65, showing that the stock still has room to move higher before entering the overbought zone, suggesting further upward potential.
MACD: The MACD line is above the signal line and rising, supporting the breakout confirmation with positive momentum.
Volume Analysis:
The breakout was accompanied by a surge in volume, which is a strong signal of sustained buying interest. This increase in volume validates the VCP breakout and strengthens the likelihood of continued upward movement.
Price Prediction:
Given the strength of the VCP breakout, Tata Communications could see an upward move towards INR 2200 in the short term, with the potential to reach INR 2250 if momentum continues. The immediate support now lies at INR 2070, the previous resistance level, which could act as a cushion in case of pullbacks
Trade Plan:
Entry: Enter at the current price level around INR 2126, as the breakout above INR 2070 has been confirmed.
Stop-Loss: Place a stop-loss below the breakout level at INR 2050 to protect against false breakouts.
Target: First target at INR 2200, with a secondary target at INR 2250.
Risk/Reward:
The risk/reward ratio is favorable at approximately 2.5:1, offering a good opportunity to ride the post-breakout momentum while maintaining a disciplined stop-loss strategy.
