IndusInd Bank Stock: Check Chart: IndusInd Bank Forms a Head & Shoulders Pattern; short for target Rs 650 for 1-2 months, says Kapil Shah
Shares with a market capitalization of more than Rs 63,000 hit a 52-week high of Rs 1241 on October 28, 2021 but failed to keep up. It closed at Rs 806 on June 24, 2022, which is a drop of more than 35%.
The private sector bank broke below key support above Rs 800 earlier in June 2022 and formed a Head & Shoulders pattern on the weekly chart.
Head and shoulders is one of the popular chart patterns widely used by investors and traders to identify market trends. This pattern occurs on the chart when the stock/index price peaks and then falls. Also read
The stock broke below the neckline of the previous pattern in June 2022 but the share price action seen over the last few sessions has pushed the price above Rs 800 after hitting a 52-week low of 763. Rs on June 23, 2022.
However, the chart structure remains weak and short-term traders could look for opportunities to short the stock with a target of Rs 650 on the downside, the experts suggest.
On the price front, the stock is trading below the 20, 30, 50, 100 and 200 DMA but above the 5 and 10-DMA.
The MACD is below the signal line and its center line, which is a strong bearish indicator. The Relative Strength Index (RSI) is at 36.4. RSI below 30 is considered oversold and above 70 is considered overbought, Trendlyne data shows.
From higher timeframe to lower timeframe,
Harp stock chart structure is on the same series and tilted towards the negative development.
“The stock is reacting from the resistance band of the quarterly chart and its ripple effect can be seen on the lower time frame chart. On the weekly chart, the stocks have formed a Head & Shoulder pattern for 82 weeks,” said Kapil Shah, Technical Analyst, Emkay Global Financial Services Limited and Trainer at FinLearn Academy.
“Patterns that take longer to form are considered stronger. In the ongoing week, the Stock has broken out of the neckline or support line, which confirms the negative connotation of this pattern,” he added.
From the Oscillator’s point of view, the MACD has shown a negative zone crossover, which is a bearish continuation sign.
Based on the above reasoning, the stock offers a short-term opportunity in the Rs 787 to Rs 800 region with a stop loss at Rs 835 on a closing basis, Shah recommends.
“On the other hand, Stocks have immediate support at Rs 650. With this setup, the stock offers a risk-reward ratio of 1:3 and the duration of this view could be around 1 to 2 months,” he added.
(Disclaimer: The recommendations, suggestions, views and opinions expressed by experts are their own. They do not represent the views of The Economic Times)