Wednesday, September 14, 2016

Is Yes Bank medium term up trend in danger?

Outlook on Yes Bank applying Elliott wave, channels and moving averages.

It was in the last week where majority were bullish as Nifty reached near the psychological level of 9000. The rise from 8540 to 8966 level was sharp and fast in nature which is enough to make the euphoria. During such times it is better to calculate the risk component. The movement of last 4 days is proof of the same that bearing high risk at the euphoric times can be dangerous. The outperforming stock like Yes Bank has retraced last 5 weeks of rise in only 2 weeks. When leaders start to underperform it provides a warning sign.

The Financial Waves Short Term Update covers in-depth research on Nifty and 3 stocks on daily basis. We have shown part of research on Yes Bank taken from the report dated 12th September 2016.     

Yes Bank weekly chart:

Yes Bank 60 mins chart: (Anticipated in the morning of 12th September 2016_

Yes Bank 60 mins chart: (Happened till now)

(Part of research taken from 12th September 2016)

Wave analysis:

“In the previous update on Yes Bank we mentioned that “On downside 1300 is the crucial support. Move above 1350 will take prices towards 1390 or higher levels.”

Yes Bank continued to behave as expected. Prices indeed broke the level of 1350 and crossed above 1390 rather quickly. The rise was euphoric and near vertical. But interesting thing to observe is that after reaching towards the channel resistance we saw an equally faster opposite move that took out the last segment of rise in faster time. This clearly highlights the fact that despite of news or event which is currently ongoing in this stock, the technical resistance levels have worked very well.

As shown on the weekly chart, for the first time since the trend started from 740 levels, prices have decisively broken and closed below the 5 weekly Exponential Moving average. It is not very often to see such euphoric rise followed by serious capitulation but it clearly highlights the risk of going long exactly when euphoria was highest.

Now the last rising segment has been retraced back equally fast which indicates an important top might be formed in this stock. For now some pullback cannot be ruled out from the oversold state but break below 1240 might continue the downtrend further.

As shown on hourly chart, prices have broken below the important channel support as well and this was the leader within the banking space which is sending nervous sign going forward for the entire sector.

In short, medium term trend for Yes Bank looks to be in danger and any pullback can be only temporary. Volatility can be high and so one should use prudent stop levels. 1325 can act as short term resistance and move below 1240 will resume the down move.”

Happened: In the session of 12th September 2016 itself Yes Bank broke below 1240 and touched the low of 1197 level. Post that consolidation is ongoing. Now what should be the trading strategy?

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