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The stock of Union Bank of India broke out of a complex inverse head and shoulders pattern on Thursday by gaining 10 per cent accompanied by extraordinary volume. Investors with a short-term perspective can buy the stock at current levels.
Following a medium-term downtrend, the stock began to consolidate sideways in early September. The sideways consolidation phase over the past three months has taken shape of complex inverse head and shoulders pattern with neck-line at around ₹60. The break-out of the neck-line on Thursday confirms the pattern and it is a bullish reversal.
The stock has also breached its 200-DMA and hovers well above it. The daily relative strength index has entered the bullish zone from the neutral region and the weekly RSI features in the neutral region. Both the daily as well weekly price rate of change indicators are hovering in the positive territory implying buying interest.
Largely, the short-term outlook is bullish for the stock. Targets are ₹68 and ₹80. Traders can buy with a stop-loss at ₹62.
(Note: The recommendations are based on technical analysis. There is a risk of loss in trading.)
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