Despite the fact that the inflation is still far from the Federal Reserve’s 2% target and shelter CPI maintained a high of 6.73% in Oct (YoY), the recent core retail sales data for October has exhibited a modest 0.1% increase, surpassing the expectation of a slight drop. This serves as an indication of consumer resilience, suggesting that individuals remain willing to make purchases.  

The positive trend in core retail sales is particularly significant as Thanksgiving and Black Friday approach. As these holidays draw near, there is an anticipated surge in travel-related spending along with other retail sales. According to the American Automobile Association (AAA), around 55 million Americans are expected to travel over 50 miles from their residence. Furthermore, the impressive number of individuals expected to take flights during the holiday, marking the highest number of air travelers on Thanksgiving since 2005, reinforces the notion of consumer resilience.  

These figures highlight the strong consumer demand, particularly within the travel sector during this festive period. As a result, investors are showing interest in the travel service sector. This resulted in a surge of 18% in the sector within a single month, with the ETFMG Travel tech ETF (AWAY) serving as the benchmark for this growth. Among the group of companies tracked, we have identified MakeMyTrip (MMYT) as a contender with upward potential.  

Technical Analysis

Charts and data Provided by TradingView

The daily chart of MMYT exhibits a potential trade opportunity with an upward breakout. The support and resistance levels are represented by the green and red horizontal lines respectively. Notably, the stock has touched the green support line twice, indicating a significant level of support and forming a bullish double bottom candlestick pattern.  

Over the past two months, the stock price has been consolidating within this range, indicating accumulation. Recently, there was a breakthrough above the resistance line accompanied by high trading volume at the breakout point. This occurrence suggests a robust buying demand for the stock, further supporting the bullish outlook. 

Charts and data Provided by TradingView

When examining MMYT on the 4-hour chart, we can observe that both the 100 SMA and 200 SMA*, indicated by the purple and pink lines respectively, are consistently trending upwards. This indicates a long-term uptrend in the price. Additionally, in more recent trends, both 20 SMA and 50 SMA, indicated by the yellow and blue lines, act as the support. Although there was a temporary break below both 20 and 50 SMA, the stock price quickly rebounded upon touching the green support line, resulting in a bullish golden cross. The stock price then remained above the 20 SMA, with instances of price rejection whenever it approached this level.  

Upon analyzing the candlestick pattern, it is also apparent that the sell side cannot take advantage of the resistance level, while strong buying force persists at the support provided by 20 SMA and 50 SMA. This is evidenced by the rapid intraday rebound of the stock price, forming bullish hammer** candlesticks. 

Nevertheless, we should be aware that several indecision candlesticks have emerged recently, showing a balance between buying and selling forces, and the uptrend has slowed down compared to the previous days. Moreover, the actual resistance may encompass a zone ranging from $41.5 to $42.8, where pullbacks have occurred before. Therefore, a potential pullback could be imminent, and we should wait for a successful retest, which signifies the flip of resistance to support. 

Conclusion

In conclusion, MakeMyTrip (MMYT) exhibits an attractive setup for a long position, with an upward breakout candlestick pattern accompanied by 20 & 50 SMA acting as support. These signals combine to give a bullish outlook. However, it is crucial to confirm the breakout by observing a retest of the current resistance level. 

Reference: ChatGPT, Investopedia, Trading View, Yahoo Finance

*SMA (simple moving average), EMA (exponential moving average), DMA (displaced moving average) are indicators used to show the trend of securities. However, they differ slightly and can be employed in different situations. SMA shows the average price over a time period while EMA places more weight on recent prices. Therefore, EMA is often favored when there is a significant price change recently. DMA refers to a moving average with all its values shifted forward or backward. It can be useful in forecasting trends. 

**A hammer is a price pattern in candlestick charting that occurs when a security trades significantly lower than its opening, but rallies within the period to close near the opening price. This pattern forms a hammer-shaped candlestick, in which the lower shadow is at least twice the size of the real body. The body of the candlestick represents the difference between the opening and closing prices, while the shadow shows the high and low prices for the period. 

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