SBIN forms three inside up candlestick pattern

The stock of State Bank of India has made a high of Rs 331.30 as on the weekend of February 28, 2020 and thereafter, witnessed a sharp correction. The correction was almost 55 per cent from the top. During this period, the stock dropped to the level of Rs 149.45. This level is acting as a strong support zone for the stock and every time it fell towards this area, it has taken support and bounced back sharply. So since 2013, the stock has not breached this crucial support zone of Rs 150 to Rs 145.

Recently, the stock has bounced from this support zone and formed a reversal three inside up candlestick pattern, which suggest that the bulls were in a dominant position. The reversal from the support is confirmed by the above 50-week average volumes. The three inside up pattern is indicating a confirmation of the bullish harami pattern, which shows the success of the forecast. 

Along with this bullish formation, the stock has also managed to close above its short-term moving averages, i.e. 20-day EMA and 50-day EMA. The leading indicator, 14-period daily RSI, is currently quoting at 63.75 and it is in a rising trajectory. The daily MACD stays bullish as it is trading above its zero line and the histogram is suggesting a pickup in the upside momentum.

Going ahead, the immediate hurdle is placed in the zone of Rs 193-Rs 198 as the confluence of 23.6 per cent Fibonacci retracement level of its prior downward move (Rs 331.30-Rs 149.45) as well as its previous swing high. Any sustainable move above the level of Rs 198 is likely to open up gates for a further rally towards the levels of Rs 220, followed by Rs 240. While on the downside, the 20-day EMA is likely to act as a crucial support, which is currently placed at Rs 169 level.

On Friday, the stock of State Bank of India closed at Rs 187.80 per share, surged by 7.90 per cent. The stock opened at Rs 176.85 per share and hit an intraday high of Rs 189.80 and a low of Rs 176 per share on BSE.