Traders favorite index Nifty Bank recently made a new lifetime high and in such bullish sentiments, one stock is trading just below the neckline of 1.5 years trend reversal price pattern.
The stock is RBL Bank Ltd operates as a scheduled commercial bank. It operates through the following segments: Corporate and Institutional Banking, Commercial Banking, Branch and Business Banking, Development Banking and Financial Inclusion, and Agri-Business Banking.
Technically the stock is in a downtrend on the weekly chart and in the first week of November 2021, it made a high of Rs 221.30. From there, it again lost its momentum and made a new lifetime low of Rs 74.15. This is how it formed lower highs and lower lows. After this, it started its journey to breach this pattern of lower highs and lower lows and made a high of Rs 189.30 in the first week of January 2023. If we draw the trendline from these 2 highs, we’ll get the neckline of the trend reversal price pattern named “Inverted head and shoulder”. A close above Rs 180 will confirm the breakout and can lift this stock up to Rs 300 which is nearly doubled from the current closing level of Rs 163.
On the daily chart, if we draw the trendline from the high of 10 February 2023 of Rs 169.10 and 28 April 2023 of Rs 163.35 we’ll again get the neckline of inverted head and shoulder pattern. In the last trading session, it registered the breakout of this pattern as it closed above this neckline at Rs 163.70 by rallying more than 6%. The minimum possible target of this pattern will be around Rs 195 which is more than 20% from the breakout level.
Interestingly, targets of the breakout on the daily chart can trigger the breakout level of the weekly chart and if we combined these pattern targets, we can say the stock has the potential to become a multi-bagger from the current levels. Thus it needed to be on the radar of long-term investors.