Technical Analysis

Trading pick of the week: Buy Canara Bank

Yoganand D | Updated on June 07, 2020 Published on June 07, 2020

Investors with a short-term perspective can buy the stock of Canara Bank at current levels.

The stock jumped 7.4 per cent with above-average volumes on Friday, breaking above a key psychological resistance level of ₹100. Moreover, it skyrocketed 24 per cent in the past week, conclusively moving out of a sideways consolidation phase.

In January, the stock had encountered a key resistance at around ₹226 and resumed the long-term downtrend.

After a sharp fall in early March, the stock, recorded a 52-week low at ₹73 and found support. Since then, it had been moving sideways in the wide band between ₹75 and ₹93 until last week.

Further, the stock’s recent rally has decisively breached the 21- and 50-day moving averages, and it is trading well above these levels.

There has been an increase in daily volumes over the past five trading sessions, backing the upmove.

Interestingly, the weekly relative strength index (RSI) and the weekly price rate of change indicator are displaying positive divergence, supporting the recent trend-reversal.

The daily RSI is featuring in the bullish zone and the weekly RSI has entered the neutral region from the bearish zone.

Although the intermediate-term trend is down, the short- to medium-term trend appears to be bullish. Hence, traders can buy with a stop-loss at ₹94.

The stock has the potential to trend upwards and reach the price targets of ₹115 and ₹125 with a minor pause at ₹115.

Published on June 07, 2020
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