Technical Analysis: Bullish Inverse Head & Shoulder pattern in BPCL suggests Buy; here's why

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26 Aug, 2025 12:21

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An Inverse Head and Shoulder (H&S) reversal pattern forms after a downtrend and its completion marks a trend reversal to an uptrend.

Inverse H&S patterns are an integral part of technical analysis, but successful traders combine these techniques with technical indicators and other forms of technical analysis to maximize their odds of success.

In the standard Inverse H&S pattern, we connect the high after the left shoulder with the high created after the head. A trend line is drawn by connecting these highest points of the two peaks, which is called 'Neckline'. This trend line is the most important component of Inverse H&S pattern.

Bharat Petroleum Corporation (BPCL) is trading above strong resistance line standing around 425 levels indicating a strong bullish bias to continue further.

The recent formation of the Inverse H&S pattern has given a breakout by trading above 425 marks which suggest buying in the stock for higher targets of 550.

Volume can also add further insight while trading these patterns. Decent volume participation while giving breakout is also giving support to Inverse H&S pattern.

Recent close prices (465) are trading above the neckline (425) of Inverse H&S pattern indicating trend reversal to an uptrend.

Short- term moving average 20 DMA (373) defines short-term trend is providing support to buyers as prices are sustained and trading above it at Rs 465 marks.

Midterm moving average 50 DMA (356) defines mid-term trend is very well augur with bulls as prices are sustained and trading above it around Rs 466 marks.

Decent volume participation while pattern breakout is also giving additional confirmation.

Target as per Inverse H&S pattern is calculated by adding the height of the head to the neckline which comes to Rs 590, however one can book profits near previous swing high which is around Rs 555.

Entire bullish view negates on breaching of right shoulder on a closing basis and one should exit from a long position. In the case of BPCL, it is placed around Rs 367 levels.

We recommend buying BPCL around Rs 450 and lower towards Rs 425 levels with a stop loss of Rs 367 for higher targets of Rs 590 as indicated in the above chart.

The author is Head - Technical & Derivative Research, Narnolia Financial Advisors

Disclaimer: The views and investment tips expressed by investment experts on moneycontrol.com are their own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.​