Break above hurdle of Rs30
South Indian Bank on multiple time frames, has attempted breakout above resistance of Rs30, which was acting as a strong hurdle since 2010. In 2013, it retraced back from its previous peak of Rs30.60 to a low of Rs19. Thereafter, it commenced a steady recovery, which resulted into a rounding bottom breakout last Friday, triggering a breakout trade.
An ideal uptrending stock
South Indian Bank surged higher with above-than-average volumes last week. It has been an uptrending stock since May 2014. During this phase of uptrend, it has been consistently making higher lows and higher highs, which is a bullish price action. That move has now pushed the stock above its long-term resistance of Rs30.
On weekly chart, the stock was locked in a tight trading range between Rs17-30 since 2010. On multiple occasions, it attempted breakout above Rs30 levels but failed to sustain at higher levels. After every failed endeavour, it found support between Rs18-19 levels. Whenever a stock breaks out after a long period of sideways movement, it results into sharp appreciation.
Bullish momentum to remain intact
Such move corroborates that the recent price movement was supported with volumes and reduces the scope for any whipsaw movement. South Indian Bank has enough potential to outperform in the near term as it has spent enough time in consolidation zone. We recommend traders to BUY South Indian Bank with stop loss of Rs24 for a target of Rs43.
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