Todays Big Stock: ICICI Bank Limited Common Stock (NYSE: IBN)

ICICI Bank Limited is a banking company. ICICI, together with its subsidiaries, joint ventures and associates, is a diversified financial services group providing a range of banking and financial services, including commercial banking, retail banking, project and corporate finance, working capital finance, insurance, venture capital and private equity, investment banking, broking and treasury products and services. It operates under four segments: retail banking, wholesale banking, treasury and other banking. Retail banking includes exposures, which satisfy the four criteria of orientation, product, granularity and low value of individual exposures for retail exposures. Wholesale banking includes all advances to trusts, partnership firms, companies and statutory bodies, which are not included under retail banking. Treasury includes the entire investment portfolio of ICICI. Other banking includes hire purchase and leasing operations and other items.

Please take a look at the 1 yr. chart of IBN (ICICI Bank Limited) that I have shown below with my added notations:

IBN has formed a nice down-channel chart pattern over the last (9) months. A channel is simply formed through the combination of a trend line support that runs parallel to a trend line resistance.  When it comes to trend lines, remember that any (2) points can start a trend line, but a 3rd or more confirms it. You can see that IBN has (4) points of channel resistance (brown) and (5) points of channel support (navy).  Always remember that after the 2nd test of each of these trend lines, the market decided they were important trend lines, not me.  Following the IBN channel can provide you with both long and short trading opportunities.

Also, please note the 50% mark (green) I have shown that runs through the middle of the channel. Notice how commonly that mark acts as support and/or resistance?

 

The Tale of the Tape: IBN has formed a common pattern know as a channel, in this case, a down channel. A long trade can be entered on a pullback to the channel support, which at this point seems to be around $22-23, or on a breakout through the channel resistance, currently sitting at $34. Short trades could also be placed at channel resistance OR if IBN were to break below the channel support. Do not hesitate to trade or add to positions at or on breaks of the 50% mark as well.

 

No matter what your strategy or when you decide to enter, always remember to use protective stops and you’ll be around for the next trade.  Capital preservation is always key!

 

Good luck!

Christian Tharp, CMT