Technical Analysis

Trading pick of the week: Buy RBL Bank

| Updated on July 26, 2020 Published on July 26, 2020

Investors with a medium-term horizon can buy the stock of RBL Bank at current levels. After an intermediate-term downtrend, the stock recorded a 52-week low at ₹101 in late April and found support.

Subsequently, the stock changed direction, triggered by positive divergence on the daily as well as weekly relative strength indices (RSI).

The daily and the weekly price rate of change (ROC) indicators had also displayed positive divergence.

Since then, the stock has been on a medium-term uptrend.

In early June, it conclusively breached a key resistance in the band between ₹160 and ₹164 and started to move sideways with an upward bias.

It surged 3.3 per cent on Friday, decisively breaching the 21-day moving average line. This rally has strengthened the medium-term uptrend.

The stock trades well above the 21- and 50-day moving averages. The daily RSI has entered the bullish zone from the neutral region and the weekly RSI is charting higher in the neutral region.

Besides, the daily price ROC has entered the positive terrain, implying buying interest.

There has been an increase in daily volume since early June. The outlook for the stock is bullish. It can continue to trend upwards and test resistance at ₹200 in the coming weeks.

An emphatic break above this barrier will take it northwards to the medium-term price target of ₹220 with a minor pause at around ₹210. Investors can buy the stock with a stop-loss at ₹164.

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Published on July 26, 2020
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