Technical Bits: IndusInd Bank bounces from double bottom zone

The stock of IndusInd Bank Limited after registering all-time high of Rs. 2,038 in the month of August 2018 entered into a downtrend and recorded a series of lower high-low. As on weekend of November 2, 2018, the stock had formed a swing low of Rs. 1,333.15 and formed a bullish candle with long lower shadow like a candle and thereafter, the stock prices rebounded to touch the level of Rs. 1,834.40. However, the stock failed to hold on to higher levels and failed in attempts to return to the previous trend. But the bears were not able to push prices much lower and stock registered an almost identical bottom as of the weekend of May 17, 2019. This resulted in the formation of a double-bottom.

Additionally, the stock had formed an opening bullish marubozu candle on Monday, this suggests that the bulls were in the dominant position near the long-term support zone. The opening bullish marubozu candle has no shadow extending from the open price end of the body. Opening bullish marubozu candle indicates extreme bullishness.

The stock after a span of almost one month has managed to successfully close above its crucial short-term moving average i.e. 13-day EMA. The positive crossover on 14-period RSI and stochastic supports overall bullish price structure. Moreover, the positive divergence is clearly visible between daily RSI, daily stochastic and stock price movement, which suggest limited downside.

Going ahead, the stock has strong support in the zone of Rs. 1,400 - 1,373 as it has an unfilled upside gap which was formed on May 20, 2019. While on the upside, the 20-day EMA is likely to act as immediate resistance, which is currently placed at Rs. 1,515 level.

On Monday, the stock of IndusInd Bank closed at Rs. 1,492.60 per share, surged by 8.64 per cent. The stock opened at Rs. 1,402 per share and hit an intraday high of Rs. 1,503.35 and a low of Rs. 1,402 per share on BSE.