hdfc bank ltd: Chart Check: The private sector banking stock gave a breakout above rectangle pattern; time to buy?
The private sector bank with a market capitalisation of more than Rs 8 lakh cr rose more than 12 per cent from its 52-week low of Rs 1271 recorded on 17 June 2022. It rallied more than 8 per cent in a month.
The recent price action helped the stock to breakout from a rectangle pattern on the daily charts for the first time since April 2021 which is a bullish sign.
The supertred indicator triggered a buy on 6th July 2022 on the daily charts. The stock moved in a tight band of 150 points where 1420 acted as a stiff resistance while on the downside 1280-1300 acted as a support.
The stock broke out from the said pattern earlier in August and is sustaining above the support line which is a positive sign.
A rectangle is a continuation pattern. When a parallel pattern is formed horizontally, it is called a rectangle. A breakout is recorded when the prices go outside of the rectangle. A breakout occurs in the direction of the existing trend.
On the price front, the stock is trading well above the short- and long-term moving averages placed around 5,10,30,50,100 and 200-DMA.
With over 20 per cent decline from the top, the stock has reached to role reversal level. It has formed base at support level which tilt towards equilibrium between buyers and sellers.
“Stock has formed multiple bullish candles like twizzer bottom, Hammer and bullish engulfing pattern. It denotes the presence of buyers at key support level,” Kapil Shah, Technical Analyst, Emkay Global Financial Services Limited and Trainer at FinLearn Academy, said.
“On weekly Chart, Stock has breached falling channel. It denotes positive movement. The stock has formed a rectangle pattern on daily chart, it implies a strong base. It has given a breakout followed by a retest,” he said.
Technically, it is known as a Change of polarity. On the daily chart, the stock is giving further bullish continuation signs.
“Based on the rationale, the stock is looking positive. It can be accumulated in the range of 1447 to 1420 with a stop loss of 1390 on a closing basis. On the higher side, the stock has potential up to 1550 level in the next 1 month,” recommends Shah.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
