SBI: Whether it will surprise on Upside ?

Hello all ...

Herein I share my observation on the Daily chart of SBI. Due to multiple observations, here I will try to highlight individual observations on separate charts. 

Pattern Formation: 

On the price front, the stock fell massively right from 330 zone to 150 zone. The last leg of correction turned out to be a little slow, making falling wedge kind of formation. Breakout of the falling wedge is placed right on the resistance line, numbering as 164. The pattern breakout came yesterday (1st June). 

Wave Formation:

The entire fall seems like an impulse, with the last leg being ending diagonal. Further formations seem like corrective up. One needs to remember that the expected up move is a counter-rally of the main downtrend. 

Volume:

During the entire formation, volumes are seen as pretty healthy. Due to consolidation formation, I would prefer to label this as accumulation volume.

Candlestick formation:

Yesterday's breakout candle was a strong green candle. Decisiveness is seen based on the candle formation. 

RSI:

Momentum indicator RSI is rising steadily since 12th March and forming higher bottoms vis-à-vis price, which is forming lower bottoms. This confirms positive divergence. Positive divergence with falling wedge may serve the best to capture momentum trade. RSI is placed at 50. The emerging rally may gain further strength. 

DMI-ADX: 

Both the DMIs have converged at 25 zone. Crossover of DMI (change of trend) is about to happen. ADX has fallen sharply from the highs, confirming the possible end of the downtrend. ADX may take support near 25 and rally along with possible dominating green DMI. 

Bollinger Bands:

Since the fall began from 320 zone, the counter was well below the average line (signal line) of Bollinger bands. Decisive crossover is seen on the average line with volume. This is supporting a possible trend reversal. Here the idea is to take possible trend reversal clue using Bollinger Bands. Further clues awaited on this indicator. 

Ichimoku:

Kijun-sen line (base-line) has acted as resistance since the fall has begun. Presently stock has tested the same resistance line (after giving breakout of falling wedge). Base-line is placed near 172 zone, which is also yesterday's high. Once price manages to cross the base-line, there seems no other resistance till clouds which are placed at 194 zone. 

Retracement: 

Reverse retracement is applied from the top of 330 to the bottom of 150 zone to find the potential resistances. The earliest resistance is at 23.6% which is at 192, getting coincide with the gap area and also the Ichimoku cloud zone. 

Putting it all together:

Falling wedge breakout, Base-line of Ichimoku, and Bollinger bands confirmation with RSI divergence and DMI Crossover along with strong volumes supporting possible bullish scenario. 

On breakout confirmation, one can eye on retracement levels and Ichimoku cloud zones as possible targets. 

levels to watch out:

172-173 (base-line and yesterday's high)

163 zone (falling wedge / ending diagonal breakout)

Reverse retracement levels as potential targets

Statutory Disclosure:

Kindly Note that sharing is for educational purpose. My personal position, my fund's position and my clients' positions may be open in the same counter. It is preferable to take advice from your financial advisor before initiating any position. Also, I prefer to keep the risk-reward ratio in mind based on personal temperament. 

Kind Regards,

Kunal Rambhia