Trending Stock: Is Federal Bank all set to zoom?

Trending Stock: Is Federal Bank all set to zoom?

by 5paisa Research Team Last Updated: Dec 11, 2022 - 02:03 am 49.4k Views
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The Federal Bank gave a bullish pennant breakout, indicating trend continuation. Is it all set to zoom? Let’s find out.

The recovery in Bank Nifty can be well attributed to a few of the well-deserved banking stocks. The Federal Bank is one of them. From the lows in March 2020, the Bank Nifty surged almost 150%, whereas the Federal Bank has jumped almost 175%, outperforming Bank Nifty by 25%. It has given breakout from bullish pennant pattern indicating trend continuation.

A bullish pennant pattern is a continuation chart pattern, which is usually witnessed when a stock experiences a large upward movement, followed by a brief consolidation, before continuing its northward journey. Remember, in order to complete this pattern, the price needs to break out from the upper slope of the triangle with higher volumes.

Having said that, the stock was under pressure since October 2017. Last week the stock broke out this downtrend suggesting a trend reversal. Presently, the stock is trading at an important Fibonacci level of 61.8%. Breaching the same would further invite bullishness. However, there few important levels that you need to look for that is 108, 128 and 185. There might be a potential pullback from these levels.

Technical indicators such as the Relative Strength Index (RSI) is also supporting the stock’s northward journey. It is presently hovering around 68, whereas its 20-week Exponential Moving Average (EMA) is at 57. Moreover, if we look at Moving Average Convergence Divergence (MACD) then it is also supporting bullishness in this stock. MACD is in the positive territory, in fact it has also given positive crossover.

The price opened at 94.8, made a high of 98 and a low of 93.3 before closing at 96.55 on October 21, 2021.

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