Canara Bank gives Inverted Head and Shoulders breakout

The stock of Canara Bank has given a breakout of Inverted Head and Shoulders pattern on the daily timeframe. This breakout was confirmed by the more than 50-day average volumes.

The inverted head and shoulders pattern occurs after an extended downward move. It represents a possible exhaustion point in the market where possible reversal may occur.

With this Inverted Head and Shoulders pattern breakout, the stock has managed to close above its crucial long-term moving average, that is, 100-day EMA, after almost three months. The leading indicator, 14-period daily RSI, is currently quoting at 68.01 while being in the bullish zone. The daily stochastic oscillator is also suggesting some bullish strength as %K is above the %D. Moreover, the other volume-based indicators, such as OBV and Money Flow Index are also very strong.
 
Going ahead, the stock has immediate support in the zone of Rs. 204-202 as the 20-day EMA and 50-day EMA are placed in that region. The major support is placed in the zone of Rs. 197-193 since the upward sloping trendline support is placed in that region. On the higher side, any sustainable move above the level of Rs. 225 is likely to open up gates for further rally towards the levels of Rs. 233, followed by Rs. 239.
 
On Tuesday, the stock of Canara Bank closed at Rs. 222.75 per share, reporting a surge of 5.67 per cent. The stock opened at Rs. 210.90 per share and hit an intraday high of Rs. 223 and a low of Rs. 209.40 per share on NSE.