F MEC INTERNATIONAL FINANCIAL LTD – Penny Stock- Rectangle Patte1. Pattern Analysis
The stock has formed a textbook Rectangle Pattern at All-Time High spanning approximately 1.6 years. This long-term rectangle represents a classic consolidation phase after a sharp price expansion seen earlier in 2023. The price oscillated between a strong resistance near ₹120 (marked in red) and support near ₹70 (marked in blue), establishing a broad sideways base. The current breakout from this consolidation zone, especially at all-time highs, signals a powerful continuation pattern which aligns perfectly with the principles of breakout trading around supply exhaustion at upper resistance levels.
2. Volume Analysis
Volume behavior adds strong conviction to the breakout. The recent sessions have witnessed an explosive rise in volume, particularly during the breakout candle, which closed at ₹121.05 with a 20% gain. This is a clear sign of renewed participation and accumulation after a long consolidation. Notably, volume during the sideways range remained modest and spiky but saw significant expansion right before and during the breakout, validating institutional interest and the legitimacy of the breakout.
3. Candlestick or Price Analysis
The breakout candle is a large bullish bar that closes near the high of the day and decisively clears the all-time high resistance zone. Prior to the breakout, the price showed strength with a sequence of higher lows, signaling compression against the resistance—a reliable precursor to breakout attempts. The breakout itself leaves behind no upper wick, demonstrating buyer dominance throughout the day. Additionally, price spent weeks near the upper half of the rectangle, indicating bullish bias even before the breakout occurred.
4. Validation of Signal
The pattern is now validated as a genuine breakout from a long-term rectangle. The breakout is accompanied by a significant volume surge and a clean technical structure. There was no overhead supply, given it was a breakout to fresh all-time highs, which gives this setup even more potential. The breakout confirms a shift in supply-demand dynamics and opens the door for a fresh leg higher. Any short-term pullbacks or retests of the breakout zone (₹115–₹120) can be considered healthy consolidations rather than weakness.
5. Tradable Points Determination
Entry Point Determination
The ideal entry point is either near the breakout close at ₹121.05 or on a slight retracement towards ₹115–₹118 if the price consolidates. This offers a favorable entry with lower risk.
Target Point Determination
The rectangle height is approximately ₹50 (₹120 resistance minus ₹70 support). Adding this to the breakout level at ₹120 projects a target of ₹170, which is the first logical objective. If the broader trend continues and volume sustains, extended targets can also be considered toward ₹200+ in the medium term.
Stop Loss Placement and Trailing SL Follow-Up
A protective stop loss can initially be placed below the breakout level, around ₹105. As the price sustains above ₹125 and begins the follow-through move, the stop can be trailed higher using swing lows or the 21-day EMA. A tight trailing stop loss strategy will help in capturing extended upside while managing risk proactively.
