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Last week, the stock of City Union Bank surged 8.3 per cent, accompanied bywith extra-ordinary volume, breaking above a key resistance at ₹180. Friday’s 4 per cent rally adds strength to the stock. Since taking support at ₹63.5 in January 2016, the stock has been on a long-term uptrend.
Following a corrective downtrend, the stock found support at ₹160 in early October and began to move sideways with a positive bias. In late November, it breached its moving average compression (21-, 50- and 200-day moving averages) at ₹170 and continued to trend up. Medium-term trend is also up for the stock. It trades well above the 50- as well as 200-day moving averages. The daily and weekly relative strength indices feature in the bullish zone, backing the stock’s uptrend. Similarly, the daily and weekly price rate of change indicators hover in the positive terrain, implying buying interest. The short as well as medium-term outlook is bullish for the stock, following the recent strong rally. The stock tests the immediate resistance at ₹205 in the ensuing trading sessions. A break above this barrier will underpin the bullish momentum. The stock can reach the medium-term price targets of ₹210 and ₹215. Investors with medium-term outlook can buy the stock with stop-loss at ₹180.
(This recommendation is based on technical analysis. There is a risk of loss in trading.)
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