The company that provides various banking products and financial services in India and internationally, ICICI Bank Ltd (NYSE: IBN) seems to be poised for a price surge as per its latest charts.
Bullish Indications
#1 Falling Wedge Breakout: As you can see from the daily chart, the stock has been trading within a falling wedge pattern during the past few weeks. This is marked in the daily chart in pink color. Currently, the stock has broken out of the falling wedge pattern. A Falling Wedge Pattern is a bullish pattern. Once the stock breaks out from it, it has the potential to move further up.
Daily Chart – IBN
#2 MACD Above Signal Line: The daily chart shows that the MACD line (blue color) has crossed above the signal line (orange color). This is a possible bullish setup.
#3 Above MA: In the daily chart, the stock is currently trading above its 200-day SMA. This implies that the bulls are gaining control.
#4 Bullish Stoch: %K (blue) line of stochastic is currently above the %D (Orange) line. The stochastic is also moving higher from oversold levels. All these are possible bullish signs.
#5 Bullish ADX and DI: The ADX line is starting to move up from below –DI and +DI lines. The +DI line is also currently above –DI line. This indicates possible bullishness.
#6 Flag Pattern Breakout: As you can see from the weekly chart, the stock was in a strong uptrend after which it started consolidating and was in a narrow range. This is a classic flag pattern and is marked in the chart in purple color. A Flag is a continuation pattern. Whenever a stock breaks out of the flag pattern, it typically continues its previous trend (uptrend in this case). Currently, the stock has broken out of the flag pattern which is a possible bullish sign.
The stock is also trading above a strong resistance-turned-support area, which is marked as a pink color dotted line.
Weekly Chart – IBN
#7 Bullish RSI: The RSI is above 50 and moving up in the weekly chart. This is a possible bullish sign. The stock is also trading above its 50-week as well as 200-week SMA, indicating possible bullishness.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, you can purchase the shares of IBN above the price of $16.50. This is marked as a green color dotted line on the charts.
TP: Our target prices are $18.50 and $22.00 in the next 3-6 months.
SL: To limit risk, place stop-loss at $15.30. Note that the stop loss is on a closing basis.
Our target potential upside is 12% to 33% in the next 3-6 months.
For a risk of $1.20, our target rewards are $2.00 and $5.50. This is a 1:2 and 1:5 risk-reward trade.
In other words, this trade offers nearly 2x to 5x more potential upside than downside.
Risks to Consider
The stock may reverse its overall trend if it breaks down from the falling wedge pattern with a high volume. The sell-off of the stock could also be triggered in case of any negative news, overall weakness in the market, or any regulatory changes in the sector.
Happy Trading!
— Tara
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