Stock at stake: Can Federal Bank sustain the bullishness?

Federal Bank breaches consolidation phase.

Federal Bank is one of those stocks that have contributed to the recovery in Bank Nifty. From the lows in March 2020, the Federal Bank has ascended almost 175 per cent, whereas the Bank Nifty has soared close to 150 per cent, thereby outperforming Bank Nifty by almost 25 per cent.   

On weekly charts, it has given breakout from bullish pennant pattern indicating trend continuation. A bullish pennant pattern is a continuation chart pattern, which is usually experienced while stock witnesses a large upward movement, which is then followed by a consolidation and finally a breakout. 

Since October 2017 the stock was moving in a downtrend and it is last week that the stock breached this downtrend suggesting a trend reversal. The stock is presently at a Fibonacci level of 61.8 per cent and getting through the same would suggest further bullishness. Having said that, traders or investors should watch out for these few crucial levels such as 108, 128 and 185. It is likely that the stock might face a pullback from these levels.  

 Looking at technical indicators such as the Relative Strength Index (RSI) which is presently hovering near 68 is also suggesting good strength. In fact, it is presently above its 20-week Exponential Moving Average (EMA) which is placed at 57. Other indicators such as Moving Average Convergence Divergence (MACD) is in the positive territory, and have also given positive crossover. 

On October 21, 2021, the price opened at 94.8, made a high of 98 and a low of 93.3 before closing at 96.55.