Technical Analysis

ICICI Bank (₹486.2): Sell

Yoganand D | Updated on March 08, 2020

ICICI Bank Ltd.   -  Bloomberg

ICICI Bank (₹486.2): Sell

 

The stock of ICICI Bank tumbled 3.7 per cent, accompanied by above average volume, on Friday, decisively breaking below a key support level of ₹500. This rally provides short-to-medium-term perspective investors an opportunity to sell the stock at current levels. After it took support at ₹390 in September 2019, the stock extended the long-term uptrend, breaking a key resistance at ₹440 in October last year. But the stock encountered resistance at ₹550 in December and began to trend sideways. The significant resistance at ₹550 had capped the upside in February this year. Subsequently, the stock changed direction and began to decline.

The price action over the past three months appears to be formation of a double-top pattern, which is an extremely bearish reversal pattern with a neck-line at around ₹500. The recent plunge of 3.7 per cent has conclusively breached the pattern on the downside. Besides, the stock trades well below its 21- and 50-day moving averages. Backing the bearish momentum, the daily relative strength index has entered the bearish zone from the neutral region and the weekly RSI charts downwards in the neutral region.

Further, the daily as well as the weekly price rate of change indicators are hovering in the negative terrain, implying selling interest. There has been an increase in the daily volume over the past one week. With the recent fall, the short-term downtrend appears to be strengthened. The stock can continued to trend downwards and reach the price targets of ₹450 and ₹440 over the medium term. Any corrective rally could be capped by the immediate resistance at ₹500. Traders can sell the stock with a stop-loss at ₹512 due to market volatility.

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Published on March 08, 2020
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