An inverse head and shoulders pattern suggests that it is a good time to buy SBI shares.
In technical terms, an inverse head and shoulders, also called a “head and shoulders bottom”, is similar to the standard head and shoulders pattern, but inverted: with the head and shoulders top used to predict reversals in downtrends.
This pattern is identified when the price action of a security meets the following characteristics: the price falls to a trough and then rises; the price falls below the former trough and then rises again; finally, the price falls again but not as far as the second trough.
Once the final trough is made, the price heads upward, toward the resistance found near the top of the previous troughs.
State Bank of India is trading in an upmove while forming Inverse Head & Shoulders pattern and this pattern will complete on a close above Rs 206.
This stock is trading near the strong resistance line standing around Rs 202, which has been tested multiple times and also suggests that a strong bullish bias will continue after a breakout.
According to Shabbir Kayyumi, (Head- Technical research at Narnolia Financial Advisors Ltd.) it is recommended that buying State Bank of India above Rs 202 with a stop loss of Rs 187 for higher targets of Rs 228 as indicated in the above chart.
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