IndusInd Bank Share: Chart Check: IndusInd Bank forms a Head and Shoulders pattern; Less than target of Rs 650 in 1-2 months: Kapil Shah

The bank, part of the private sector banking sector, has fallen over 30 per cent from its October 2021 highs and puts the stock in a bear grip and the chart pattern suggests the pressure is likely to continue.

The stock with a market capitalization of over Rs 63,000 crore hit a 52-week high of Rs 1241 on 28 October 2021 but failed to sustain the momentum. It closed at Rs 806 on June 24, 2022 which translates to a fall of over 35 per cent.

The private sector bank broke below the crucial support level of Rs 800 in the month of June 2022 and formed a head and shoulders type pattern on the weekly chart.

The head and shoulders is one of several popular chart patterns widely used by investors and traders to determine market trends. This pattern occurs on the chart when the stock/index price reaches its peak and then declines. read also


The stock first broke below the neckline of the pattern in June 2022, but the stock’s price action seen over the past few sessions pushed the price above Rs 800 after hitting a 52-week low of Rs 763 on 23 June 2022 .

But the chart structure still remains weak and short-term traders can look for shorting opportunities in the stock with a target of Rs 650, suggest experts.

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On the price front, the stock is trading below the 20, 30, 50, 100 and 200 DMA but above the 5 and 10-DMA.

MACD is below its signal and center line, which is a strong bearish indicator. The Relative Strength Index (RSI) is at 36.4. The trendline data shows that an RSI below 30 is considered oversold and above 70 is considered overbought.

from high time frame to low time frame,

The chart structure of the stock harps on the same string and leans towards negative growth.

“The stock is reacting from the resistance bands on the quarterly chart and its ripple effect can be seen on the lower time frame charts. On the weekly chart, the stocks have formed a head and shoulders pattern for a period of 82 weeks,” said Kapil Shah, technical analyst, Emkay Global Financial Services Ltd and trainer at Finlearn Academy.

“The patterns that take longer to form are considered more powerful. In a current week, the stock has broken the neckline or support line which confirms the negative impact of the pattern,” he said.

From the oscillator perspective, the MACD has given a negative crossover in the negative zone indicating a bearish continuation.

Based on the above logic, the stock offers a short opportunity depending on the close with a stop loss at Rs 835 level in the region of Rs 787 to Rs 800, recommends Shah.

“On the downside, the stock has immediate support at Rs 650 levels. With this setup, the stock offers a risk-reward ratio of 1:3 and the duration of this view can be around 1 to 2 months,” he said.

(Disclaimer: Recommendations, suggestions, views and opinions given by experts are their own. They do not represent the views of The Economic Times)

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