Indian Overseas Bank

We recommend a buy in Indian Overseas Bank from a short-term trading perspective. From the charts of the bank it is clearly visible that it has been medium-term uptrend from its 52-week low of Rs 69, recorded in July. We notice an ascending triangle pattern, spanning over the past two months. Generally, ascending triangle patterns are continuation patterns however; in rare cases they also occur as reversal patterns. At present this pattern operates as a reversal pattern. In early September, the stock penetrated the long-term down trendline which was in place since January. On September 18, the stock conclusively broke out of the triangle pattern by surging 7 per cent with high volume. The stock is trading well above its 21 and 50-day moving averages. The daily relative strength index is featuring in the bullish zone. The daily moving average convergence and divergence is also featuring in the positive territory. Our short-term forecast for the stock is positive. Traders with short-term perspective can buy the stock while maintaining a stop-loss at Rs 104. We anticipate the stock to move up until it hits our price target of Rs 122 in the forthcoming trading sessions.