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FUTURE TRENDS OF BANK INDUSTRY : MOVING AVERAGES, RSI, CANDLE STICKS
A. AFRISH IBRAHIM BE-CSE(AI & DS) CHANDIGARH UNIVERSITY
COMPANIES : BANK INDUSTRY
SUMMARY AND KEY FINDINGS :
This project analyzes the performance of four leading banks—HDFC Bank, IOB Bank, CANARA, and PSB Bank—using 50-day and 180-day Moving Averages (MA), Relative Strength Index (RSI), and Candlestick Patterns to predict future trends. Data from March 2022 to November 2022 was studied for technical insights.
INTRODUCTION :
TECHNICAL ANALYSIS :
OBJECTIVE :
TOOLS USED :
ANALYSIS :
TIME FRAME : 1DAY (LONG TERM)
1. MOVING AVERAGE - 50MA & 180MA
HDFC BANK :
On June 19, 2024, the 50-day MA crossed above the 180-day MA with high liquidity, triggering a 12.10% surge in price.After the breakout, the stock tested the 50-day MA as support three times (not precisely), maintaining its uptrend.On January 3, 2025, the 50-day MA was breached with high liquidity, leading to a continuous decline that brought the price down to the 180-day MA.On the weekly time frame, the stock is currently at the 50-day MA, which is typically considered a strong support level. Also Market is falling from All time High.
Currently, the market is in a consolidation phase with a support. If the price fails to hold above the 180-day MA, a further decline can be expected.
IOB BANK :
On September 24, 2024, the 50-day MA crossed below the 180-day MA with high volatility, signaling a potential bearish shift. Despite this, the market experienced a surge of nearly 16% downside, the 50-day MA acted as a strong resistance, leading to multiple rejections. This consistent rejection suggests that buyers struggled to maintain momentum. Additionally, in the weekly time frame, the 180-day MA is positioned significantly lower, indicating that the market still has room for further decline. Given these factors, there is a high probability of a bearish trend continuation, especially if the price fails to reclaim key resistance levels.
High Probability for a Bearish trend due to a strong resistance.
CANARA BANK :
On September 12, 2024, the 50-day MA crossed below the 180-day MA, but the breakdown failed to sustain, leading to a minor trend correction. The price reversed exactly at the 180-day MA and then falls by 20%, indicating strong selling pressure. However, the 50-day MA acted as a strong resistance, leading to a subsequent decline. In higher time frames, such as weekly and monthly, this movement appears to be a minor correction rather than a full trend reversal. Additionally, the 180-day MA is positioned much lower, around ₹70, suggesting potential downside if the market fails to regain strength.
The market is expected to decline in the coming days until it reaches the 180-day MA on the higher timeframe.
PSB BANK :
On September 27, 2024, the 50-day MA crossed below the 180-day MA, leading to a 16% decline. Following this breakdown, the 50-day MA acted as strong resistance, keeping the price below both the 50-day and 180-day MAs. In the weekly timeframe, the price is approaching the 180-day MA, indicating a potential continuation of the bearish trend in the coming days. There is also a high probability of a reversal around ₹20, making it a key level to watch.
Bearish Trend for Upcoming days until the price reaches 20.
2. RELATIVE STRENGTH INDEX(RSI)
HDFC BANK :
RSI = 45.97
RSI is below 50, meaning the stock is in a weak/bearish momentum but not oversold yet.RSI has crossed above this SMA, suggesting a possible short-term reversal or at least reduced selling pressure.33.55 is marked, likely acting as RSI support (previous low).RSI bouncing from this level could mean the stock found temporary support and may consolidate or recover.
If RSI crosses above 50, the stock may gain strength.If RSI drops below 40, selling pressure may increase.
IOB BANK :
RSI = 47.20
RSI is below 50, indicating a neutral to weak momentum. But the price keeps holding above SMA line which means minor bullish possible for upcoming days.
If RSI crosses above 50, bullish strength may increase. If RSI drops below 45, it could signal weakness and a possible downside move. Watch for a breakout above ₹52 for confirmation of trend continuation.If the stock closes below ₹48, further downside could be expected.
CANARA BANK :
RSI = 37.55
The RSI is below 50, indicating that the stock is under selling pressure. Additionally, the RSI breaking below the SMA further confirms that the stock is currently controlled by bears. However, if the price manages to break above the SMA with support from RSI, a minor recovery may be possible.
Stock is under selling pressure for upcoming days.
PSB BANK :
RSI = 45.84
After reaching the oversold zone, the stock began to recover gradually on January 13, 2025. Currently, the RSI is holding above the SMA, indicating that bullish sentiment is slowly gaining strength. If the RSI crosses above 50, it could signal increasing bullish momentum. Conversely, if the RSI drops below 44, further downside may be expected. A breakout above ₹48-₹50 could confirm a trend reversal, while a close below ₹44 might indicate increased selling pressure.
Stock is slowly recovering. More possibility for a Bullish Trend in future.
3. CANDLE STICK PATTERNS (PRICE ACTION)
ONLY BY TECHNICAL ANALYSIS.
HDFC BANK :
The stock is currently in a bearish phase, having started its decline on December 17, 2024, after reaching an all-time high. A trendline breakout on the chart clearly indicates a bearish trend in the coming days. However, a minor recovery or retest may occur. If the market closes and sustains above 1800, it will be considered a trend reversal to bullish, with a high possibility of reaching a new all-time high. On the other hand, if the market breaks and sustains below 1600, the bearish momentum is likely to continue, potentially pushing the price down to the 1450-1400 range.
Now at Consolidating phase. 1800 above extreme Buying pressure. 1600 below extreme Selling pressure.
IOB BANK :
The stock is currently forming trendline liquidity. If it breaks the trendline with high volatility and sustains above 60, strong buying momentum can be expected. Conversely, if the market breaks the low and sustains below 45, it may decline further to 30. As of January 30, 2025, the market is in a consolidation phase.
Should wait until the level breaks, Up to that the stock is to be considered as Sideways.
CANARA BANK :
The stock is likely to decline in the coming days, with a high chance of reaching the 60-70 range. On the monthly timeframe, the market is currently in a retesting phase. If fundamentals and global trends are favorable, a bounce-back from the 60-70 level may occur.
The stock is more likely to fall for upcoming days.
PSB BANK :
The stock is under selling pressure and is expected to decline to the 15-20 range, where a buyback or buy-on-dip opportunity may arise. If the market breaks, sustains, and closes above 70, it will indicate a full bullish reversal with a 99% probability of reaching 100.
The stock is under selling condition and likely to fall up to 15-20.
OVERVIEW :
In general, the stock market is heavily influenced by global news, fundamentals, and technical factors. The current analysis is based solely on technical data; however, fundamentals also play a crucial role.
In January, global news has not been favorable for the stock market, leading to a continuous decline in recent days. Looking ahead, the overall market condition is likely to remain under selling pressure due to economic conditions, investor fear, or potential profit booking. Given this scenario, the best strategy would be to focus on Buy on Dip opportunities.
DISCLAIMER :
REFERENCES :
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