binuppaul

SBI- Possible Short Trade Setup in Progression

Short
NSE:SBIN   STATE BK OF INDIA
SBI seem to be forming a Head and Shoulder pattern in the shorter time frame chart. The pattern to be completed needs the price to test the neck line placed near 420-418 levels and break below. The immediate targets for the set up, if it realizes can be 406/393. The stop loss needs to be placed above 436, which is slightly above the most recent high made intraday (June 11).

Possible trades from the set up

1. Aggressive traders may consider shorting the stock/ Futures on any up move towards 433-435 levels, keeping a stop loss at 436.2.

2. Those willing to risk about 7000 to 8000 and wait for approximately 40 days may consider buying the 420 PE July series, currently priced at 15.75 (closing price as on June 11). If the trade materialises the option should be worth around 24 near final target . Square off the option at market if the price closes above the stop loss mentioned in daily chart .

3. Those who wish to carry overnight position and look to hedge can short the July Futures intraday when the spot price is near 433-435 range and hold the position as long as the spot price do not breach the stop loss mentioned. If the trade is in our favor, towards closing buy 430 CE July series and convert the intraday Futures position to overnight. This can offer some hedge and also will allow you to carry the trade overnight with a small margin.

Note:

I am not a SEBI registered analyst
The information given is only for educational purposes.
Comment: 1. Target one and two done in Cash market

2. Target given for PE done

Comments

Can we consider that triple bottom is formed yesterday and today it moved up.
Analysis got changed to upside ?
Reply
binuppaul kiran2k7
@kiran2k7,

Lets wait for confirmation. For the pattern to complete it must break and sustain below the neckline. If the pattern gets completed the downside targets as mentioned in the analysis are possible. The right shoulder seem to be in tact as of now, if it is taken out convincingly on the upside, then the immediate targets on the upside can be 443/456/468.

Having said this the stock is in a strong uptrend both technically and fundamentally in the higher time frames. Even a 10 to 15 percent downward move would not alter the longer term perspective, which remain extremely bullish
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I've experienced this multiple times that H&S pattern usually don't break the neck line after right shoulder is formed.
It usually moves upward, makes a lower high (lower than the high of right shoulder) and then breaks the neck line.

Have you experienced something similar too in practice ?
Reply
binuppaul raharora
@raharora,

Yes many times.. In that it forms a triple bottom and then we need to change the view accordingly
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