AXIS BANK – A GOOD LONG-TERM PROSPECT?
AXIS bank
has corrected 60% from its highs of 760 and had touched 300, but does it make
AXIS Bank a good investment opportunity?
I have broken it down to you and analyzed AXIS bank on WEEKLY Time-Frame.
WEEKLY Time-Frame
Click on Chart to Expand
Key Observations-
1. VOLUME ANALYSIS-
SELLING CLIMAX (Green Arrows)-
A climax
occurs at the end of bull or bear market cycle and is characterized by escalate trading volume and sharp price movements. The
beginning of selling Climax is often signaled by steadily increasing volume on
sell side of market as growing pessimism accelerates the downtrend.
On this
weekly chart of last 12 years (Green Arrows), volume climax has happened 3
times and once all selling pressure is over, there was a good Up-move.
VOLUME SPIKE (Dotted blue and Red lines)-
Unusually
large volume, graphed on chart. If one day’s volume is two to three times the
average volume, it will appear as spike. Volume spikes are plotted on Ascending
Triangle formation. Volume spikes on trend line Support and Resistance
confirms visibility of big buyers and sellers.
Currently
AXIS bank is at demand Zone and
is witnessing huge volume spikes.
2. DEMAND AND SUPPLY ZONE (Rectangle
box)-
3. RELATIVE STRENGTH INDEX (Blue UP Arrows)-
Relative Strength Index (RSI) is momentum oscillator that measures Speed
and change of Price movements. RSI
oscillates between 0 and 100. Traditionally RSI is considered
overbought when its above 70 and oversold when below 30.
Over the last 12 years AXIS Bank has faced 6 oversold levels (Blue
Arrows) where the RSI has touched below 30 levels on weekly chart. AXIS Bank
managed to gain momentum as soon as it reached over sold levels and bulls
managed to change the trend up. Currently
AXIS Bank has reached extreme Oversold levels and history suggests
that it could be a good entry point for new buying.
Click on Chart to Expand
4. FIBONACCI RETRACEMENTS –
Fibonacci retracement levels are horizontal lines that
indicate, where support and resistance are likely to
occur.
They are based on Fibonacci numbers.
Each level is associated with a percentage. The percentage is how
much of a prior move the price has retraced. The Fibonacci retracement levels are 23.6%, 38.2%, 50%, 61.8%, and 78.6%.
AXIS Bank after hitting a low of 285 managed to retrace till 465 which
is 38.2%. Currently it is stuck at 23.6% i.e (400).
5. PRICE CHANNEL-
A price
channel is a continuation pattern that slopes up or down and is bound
by an upper and lower trend line.
The upper trend line marks resistance and
the lower trend line marks support. Price
channels with negative slopes (down) are considered bearish and those with
positive slopes (up) bullish.
For explanatory purposes, a “bullish price channel”
will refer to a channel with positive slope and a “bearish price channel” will refer to a channel with
negative slope.
AXIS Bank has
broken its bullish pattern and is facing resistance around 400, which is
negative for short term
SUMMARY –
Looking at
all the above points, we can conclude that AXIS Bank can be accumulated at current
levels of 360 to 375 with Stop loss of 325.
Second phase of buying can be done when AXIS bank is able
to sustain its 400 level for few weeks.
A medium-term target can be placed at
480 to 522 and long-term target of 600 can be achieved in few years.
In Short
term, we could see some pressure, but Axis Bank is a good Investment Prospect
currently.
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