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The stock of Canara Bank break-out of a key resistance at ₹211 on Tuesday by gaining 4.8 per cent accompanied by above average volume. This rally provides traders with a short term perspective an opportunity to buy the stock at current levels. Following a medium term downtrend from the July high of ₹296, the stock recorded a 52-week low at ₹170.5 in early October. It took support in the band between ₹170 and ₹180 and reversed direction triggered by positive divergence in the daily relative strength index. While trending up, it has conclusively breached the 21- and 50-day moving averages in late October and trades well above these averages. Interestingly, the price action since early September this year appears to be formation of an inverse head and shoulders pattern, a bullish reversal pattern with neck-line at ₹171.
The recent rally has break-out of the neck line. The daily RSI hovers in the bullish zone. There has been an increase in daily volume over the past two weeks. Targets are ₹230 and ₹236. Traders can buy with a stop-loss at ₹216.
Note: The recommendations are based on technical analysis. There is a risk of loss in trading
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