ALKEM - Volatility Contraction Pattern (VCP)Name - ALKEM
Pattern - VCP
Status - Breakout and near target
Cmp - 61700
Target - 6437
SL - 5496
Fundamentals:
Here are some key financial ratios for Alkem Laboratories Limited:
Price-to-Earnings (PE) Ratio: 33.41
Price-to-Sales (P/S) Ratio: 5.41
Debt-to-Equity Ratio: 0.092
Return on Equity (ROE): 15.2%2
Net Profit Margin: 10.8%2
Enterprise Value to EBITDA: 19.52
These ratios indicate Alkem’s valuation, profitability, and financial health. The company has a relatively high PE ratio, suggesting it is valued at a premium compared to its earnings. The low debt-to-equity ratio indicates a conservative approach to leverage.
Pattern Information:
The Volatility Contraction Pattern (VCP) is a technical analysis pattern popularized by trader Mark Minervini. It is used to identify potential breakout stocks. Here’s a breakdown of the VCP:
Structure
Contractions: The pattern is characterized by a series of price contractions, where each pullback is smaller than the previous one. This indicates decreasing volatility and tightening price action.
Volume: Volume typically decreases during the contractions, showing reduced selling pressure.
Breakout: The pattern is completed when the price breaks out above the resistance level formed by the highest point of the pattern, ideally on increased volume.
Interpretation
Bullish Signal: The VCP is considered a bullish pattern, suggesting that the stock is likely to move higher after the breakout.
Entry Point: Traders often enter a position when the price breaks above the resistance level with increased volume.
Stop-Loss: A stop-loss order is usually placed below the lowest point of the last contraction to manage risk.
