ICICI Bank trades in bearish flag pattern

The stock of ICICI Bank Limited has given a neckline breakout of Adam & Adam double top pattern as on February 28, 2020 and thereafter, witnessed a sharp correction. The correction was nearly 51 per cent from the top. However, considering the daily time frame, the stock is trading in counter trend consolidation since the last 20 trading sessions and formed a bearish flag pattern.

The flag pattern is a short-term trend continuation pattern that marks a small consolidation before the previous move resumes. A bearish flag pattern is composed of an explosive downward price move that forms the flagpole, followed by an orderly and diagonally symmetrical pullback, which forms the flag. When the lower trendline support the flag breaks, it triggers the next leg of the trending move.

The major trend of the stock is bearish as it is trading below its weekly pivot and below its long and short-term moving averages, i.e. 20-day, 50-day, 100-day and 200-day EMAs. Among the momentum indicators, the 14-period weekly RSI, is currently quoting at 35.71 and it is trading below its nine-week average. The weekly MACD stays bearish as it is trading below its zero line and signal line. Moreover, on the weekly directional index, the bearish strength is higher than the bullish strength as +DI is much below -DI.

Going ahead, the zone of Rs 378- Rs 386 will be a major hurdle for the stock. While on the downside, we expect the stock to touch the lower trendline of flag pattern, which is currently placed at Rs 310 and in case, it sustains below this level, it may touch its recent swing low of Rs 268.30.

On Friday, the stock of ICICI Bank closed at Rs 334.85 per share, dipped by 5.09 per cent. The stock opened at Rs 339.40 per share and hit an intraday high of Rs 343.05 and a low of Rs 331.65 per share on BSE.