Banks have performed well over a last few weeks, maybe this is in anticipation that the worse is over for the Banking and Financial sectors. Maybe because the can of worms is now empty or maybe just that they were so beaten down that this relief rally was what the doctor ordered! Nevertheless let us see what story the charts are trying to tell or rather what I personally can infer from them.
As usual I start with a weekly chart of CNX BANK INDEX. First the obvious; yes we have a kind of slanting inverse H&S and a very nice trend line in this case the neckline. The price is in the sweet zone between the two EMA’s. MACD histogram is above the zero line and MACD lines have given a bullish crossover. Bank Index needs to break and close above 6650 for an immediate target of 7000/7200. The immediate supports are at 5950/6000 and breaking of pivot low at 5650 negates any bullish view we might want to adhere to.
Moving on to the daily chart, we can observe compression in prices we have had two inside bars vis a vis the bar we made on the 2nd of September, the highs and lows of this bar can be used as stops for trading the Bank Index for shorts and longs respectively. The supports on the daily are at 6150 and 5950 where as the overhead resistance is at 6550 and a breakout is confirmed if we trade above 6620 with volumes.
Since we just discussed the Bank Index, why not take a peek at SBIN a pivotal in Bank Index. Below is a collage of 4 charts (didn’t have patience to mark them individually), the charts going clockwise are hourly, daily, RS (gray background) and the weekly. First the weekly gets dissected; yes we have an inverse H&S here too! After the previous week’s hammer we have a long bullish candle accompanied by volumes. Last few weeks action is concentrated between the 23.6% and 38.2% retracement levels of the January high and July low. So I presume we have are make or break levels between these two points. With 1300 has a strong support SBIN needs to break above 1550, to take the path to 1625/50 and eventually to 1700. In the daily chart the price is nesting just below the trend line resistance waiting to breakout. We have a Doji on our hands (also an inside bar if using bar charts) a break above 1550 initiates a long trade (conservative play) with stop at 1450. The Hourly charts looks a bit tired and would be no surprise if it retraces to 1485/1500. The final chart with the RS line shows that SBIN is slowly gaining strength vis a vis the Index (Nifty Index in this case)
1 comment:
Sir I again think bullish inverse H&S pattern is not valid, as there is no prior "extended" trend to reverse here.
I don't think within downturn of 8 months we will see bullish inverse H&S pattern so soon!
Post a Comment