Stock: Canara Bank
Current Market Price: 102 Stoploss: 90 Target: 144
Duration: 6-8 months

There are some patterns in Technical Analysis which are suited best for weekly chart and are characterized by gradual movement unlike sharp movement seen in other patterns. One of them is the rounding bottom pattern which is a long term reversal pattern. By understanding the importance of these chart patterns, investors can better position themselves to capitalize on price movements and make more informed trading decisions. The pattern signals that the existing downtrend is about to finish and the possibility of an uptrend to commence. This creates an opportunity to go long. One of the advantage of rounding bottom pattern is that traders have ample time to take trade and do not have to rush as the pattern unfolds slowly and gradually where we can see all stages of investing which is correcting, accumulating , flattening out phase and distributing.

Technically the re-test of the neckline of the ‘Rounding bottom/ Accumulation phase’ suggest yet another good entry point. The termination of the corrective wave at 94 support aligns with both weekly and daily indicator, including the weekly RSI around 34, which historically has marked demand zones with recent evidence of October 2020. On the daily scale, the ‘Falling Wedge’ pattern also reinforces the view that the corrective move is nearing completion, with potential for the breakout above the 200 DEMA level at 105, signalling the onset of fresh bullish wave. The structure again aligns with a ‘ Bullish Flag’ pattern, supporting the stock’s ongoing uptrend and setting price target of 165. Therefore, we recommend buying within the 94 zone with stoploss below 90 on weekly close, aiming for intermediate target of 144 as the uptrend continues to evolve.

Read more: Canara Bank slips 20% from highs; what investors should do

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