Chart Check: OFSS gives a breakout from a falling channel formation; could retest 52-week highs soon

Oracle Financial Services Software Ltd (OFSS), part of the software products industry, has given a breakout from a falling channel resistance on the daily charts which suggests that bulls could regain control.

Short term traders can look to buy the stock for a possible bounce back towards its September 2023 highs in the next 1-2 months, suggest experts.

The stock hit a 52-week high of Rs 4528 on 11th September 2023 but it failed to hold on to the momentum. It found support above 3800 levels in October and spent considerable time around the same.

The consolidation above 3800 levels in October and November suggests that the stock has made a strong base. The Supertrend indicators also triggered a buy last week on the daily charts.

In terms of price action, the stock is below 5,10, and 50 DMA but above 20,30, 100, and 200-DMA on the daily charts.

OFSS stock is likely to track movement in the IT index, suggest experts. The Nifty IT quarterly chart suggests that sectors’ rise, and fall is in a readable cycle since the year 2007.

“In most cases, the up and down swings were in the range of 7 to 9 quarters. However, the recent quarter has witnessed a 6-quarter fall so far. Based on previous instances, it suggests that the downward cycle is likely to terminate soon,” Kapil Shah, Technical Analyst, Emkay Global Financial Services Limited and Trainer at FinLearn Academy, said.

“From a stock perspective, OFSS has given a breakout from the falling channel. It took support at long-term moving average followed by short-term moving average crossover,” he said.

“Price movement forms a strong structure and moving average crossover indicates momentum. Recent upside movement is accompanied by rising volume,” highlights Shah.

“Based on the above rationale, the stock offers a good opportunity to buy in the range of 4140 to 4000 with stop loss of 3850 on a closing basis. The stock can have upside movement 4540 level,” he recommends.

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(Disclaimer: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of the Economic Times)