Chart Check: Contra buy? Down 30% from highs but channel breakout on weekly charts makes City Union Bank an attractive buy
City Union Bank Ltd, part of the private sector banking space, has fallen by about 30% from December 2022 highs but the stock gave a breakout from a channel pattern last week which has opened room for the stock to head higher.
As long as the stock stays above 136-140, bulls will be able to make a comeback, suggest experts. If the momentum continues, the short-term target is placed around 160, they say.
The private sector bank hit a 52-week high of Rs 204.95 on 15th December 2022, but it failed to hold on to the momentum.
The stock closed at Rs 143.65 which translates into a fall of nearly 30%.
After hitting a high in December 2022, the stock underwent a period of consolidation. On the weekly charts, the stock found resistance above 140 levels while on the downside support was seen above 120.
The stock closed at Rs 143 on 12th November 2023 which marks a brief breakout from a channel pattern on the weekly charts.
The stock recently climbed above the 50-DMA on the daily and weekly charts.
It is on the verge of giving a Golden Cross on daily charts where the short-term moving average (50-DMA) crosses the long-term moving average (200-DMA) from below.
The Supertrend indicator also triggered a buy last week on the daily charts which augurs well for the bulls.
On the price action front, the stock is now trading well above most of the crucial short- and long-term moving averages such as 5,10,30,50,100 and 200-DMA on the daily charts.
The daily Relative Strength Index (RSI) is at 64.5. RSI below 30 is oversold and above 70 is considered overbought, Trendlyne data showed.
