HDFC Bank Technical Analysis, Trading Strategy

After making record highs and posting good Q1 results, HDFC bank has started correcting recently since 11th July, 2012. Though, it has the potential to break 600 levels, the external events in the form of prevailing sovereign debt crisis in the euro zone & US dollar finding demand as a safe haven and internal events like policy paralysis has made the overall scenario worse especially for banking stocks.

So, what to do in HDFC bank? Let’s discuss HDFC bank technical analysis and trading strategy.

HDFC BANK TRADING STRATEGY AND TECHNICAL ANALYSIS

HDFC bank has failed to reach a 100% Fibonacci extension of the ABC move even after posting good results and making new highs. In fact, yesterday on the downside HDFC bank has tested the 61.8% Fibonacci extension of the ABC move and found some support. Also, it has broken a rising trendline which was acting as a support since 1st June, 2012. Not only that, the oscillator has fired a signal below 0 since then too. Since record highs, there was a consolidation phase and the squeeze had formed which too has fired a SELL signal yesterday. Now, to make things interesting, HDFC bank has also formed a Bearish Butterfly pattern which is a strong bearish pattern.

HDFC BANK TRADING STRATEGY AND TECHNICAL ANALYSIS

Presently, keeping these various technical chart patterns and formation along with the global scenario HDFC bank has entered a technical short term bearish phase. So, one can SELL HDFC bank with a price target of 551-538-534 and SL of 598 which is the 100% Fibonacci extension of the ABC move.

Now it’s your turn…..

Feel free to share your experience and thoughts in the comments area.

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